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Sony: SWOT analysis Essay

Sony: SWOT analysis

EXECUTIVE SUMMARY

The industry where Sony Inc operates both in its entertainment industry and electronics technology industry are both high keenly competitive. The challenge facing the corporation is how to integrate effectively its diverse business units to utilize maximally the benefits of its vast resources. Furthermore, there is the problem of maintaining adequate top executive that would drive the organization into higher heights and maintaining its market leadership place. The Sony Inc under the leadership of Stringer sought to adopt a cost reduction strategy that would make the organization compete favorably with its rivals. In addition, strategic human resource management is adopted by Sony Inc, where workers contribute to the development of the organization’s strategic thrust. Howard Stringer faces a huge task to reposition Sony to its lost glory and ensure gain from the financial loss that is experience resulting from the cost reduction strategy it embarked on.

It is thus, recommended that the Sony management adopts a strategy of portfolio streamlining; where its business operations are coordinated and structured for easy integration. Putting an effective human resource planning for maintaining top executive for the organization is needed for maintaining and aiding the organization maintain its market leadership.

1.0 INTRODUCTION

The dynamics of contemporary business operation requires that constant innovation and introduction of strategy that could not be easily imitated be put in place. Putting this into practice would make an organization stand to curve a niche over its rivals and competitors. Peter (2005:7), argue, “Dynamic in nature, the strategic management process is the full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns”.

Sony Inc with its diverse business units in the entertainment and technological-electronics industries is a force and leader to reckon with. To maintain its leadership stand in these industry the leadership of the organization need not only to sustain and increase the profit maximization for stakeholders, but also to unveil new business opportunity that are not yet tapped by rivals , thereby putting the organization ahead  its rivals. According to Brown & Eisenhardt (1998:3), “strategy is about two things: deciding where you want your business to go and figuring out how to get there”. Strategic management pattern of every organization may differ from what is obtainable in another; while there may be areas of similarity, certain aspects are uniquely structured out to suit the operation of the organization in concern. The challenges facing business is how to strategize to curtail these changes. This is what Sony Inc need to unravel under the leadership of Stringer.

2.0 COMPANY ANALYSIS

The Sony Inc has business unit spanning in the entertainment industry and in the technological electronics industry. The feet that Howard Stringer has attained in leading the Sony organization and entertainment unit in US had made him the right choice for leading the Sony electronic business unit in Japan. To sustain and maintain a leadership role in the Sony Incorporation where vibrant leadership will effectively build the right structure that would make it stand amidst uncertainties in the industry and the dynamics in innovation creation as relating to electronic and technology development.

PROBLEM MILITATING AGAINST SONY

The problem militating against Sony electronic and technology business units include

The lack of adequate coordination and synchronization of vast resources in the Sony organization. This require the matching of manpower to other operational resources and maximizing the utmost productivity from the organization’s vast resources
The challenge of maintaining the market leadership for the Sony organization, in the mist of rivals who have quality products that can compete favorably with Sony’s problem.
The need to enhance financial flexibility among the different operating business units of Sony Inc;
The need to maintain an effective human resource planning to ensure that top executive is in ample supply, in other to keep the organization
Continuous financial loss and reduction in quoted share price.

CAUSES OF PROBLEM

The causes of the identified problems include

Lack of a proper human resource planning scheme to prevent a lacuna in the needed human resources for the top echelon in the organization management;
The operating of a tight financial regime for each of the business unit do not allow flexible financial flow in between for instance the entertainment unit and the electronic unit of the Sony organization;
Transferring leader from the entertainment business unit to head the electronic unit has caused the problem of coordination of resources in the electronic unit, as observed in the case of Stringer transfer.
The lack of innovative strategy that would be difficult for rivals to copy has made the competition a stiff one for Sony to break out from, as observed in the industry.
Financial loose in shareholder fund is cased by the cost reduction strategy and job cut embraced by Sony Management.

3.0 SWOT ANALYSIS OF SONY INCORPORATION

SWOT analysis (Strength, Weakness, Opportunities, Threat) is a management appraisal tool useful in weighing how the internal and external variables surrounding an organization influence its ability to compete and successfully operate to maximize its objectives and goals.

Strengths of Sony Inc

The Strength of the Sony organization lies in the diversity of its products and business units. This diversity of operational units makes the Sony organization build up its empire of business operation. This is reflected in its entertainment and music-recording label Sony-BMG Music label of Sony. Furthermore, the electronic business units of Sony are highly diversified. Plethora electronic products and technological gargets are the delight of customers patronizing Sony electronic and technological products. Sony is a brand name when it comes to electronic and technological products. The different products of Sony Inc are recognized as durable and qualitative.

Another strength attributed to the Sony Inc is in the area of innovativeness. The company is maintaining its market leadership because of the continuous innovation of new products, especially in areas of its electronics. The staffers of the organization are well coordinated and specifically trained to engage in research and development.  This is reflected in the strategic human resource management, embarked by Sony Inc.

Formation of synergies between other organizations of like–interest has made Sony Incorporation to continue to triumph in its operations. The success in strategic alliance and merger formation for Sony Incorporation is reflected in its corporate merger in the entertainment unit of the corporation with BMG. This and many other strategic alliance and synergy formation has really sustained the leadership role of Sony Inc. for instance; the super chip in Sony PlayStation 3 is developed through the partnership formed by the organization with International Business Machine (IBM). Furthermore, the Sony Ericsson mobile phone was developed and makes a market household name through the joint venture arrangement the organization entered with Samsung.

 Weakness of Sony Incorporation

The diverse operation of the Sony Inc has made the organization have the challenge of integrating its operations and diverse portfolios to obtain better services and products for its customers.  The difficulty in integrating the plethora operational units of Sony considering the portfolio diversity is tasking to the organization’s management. The integration and transition of resources to the different business units becomes very difficult. Just as the scenario when Stringer was transferred from Sony Music in U.S. to operate the Japan Sony electronics units. There was the challenge of fitting in to this area of operation for the organization. Some restructuring were put in place by Stringer. Such as downsizing of workforce, entering into partnership and joint venture with other business associates to enable the Sony Inc continue to maintain its leading status in the industry. Thus, one of the major challenges facing the Sony Inc is how to maximize effectively the utmost use of its vast resources in its different business units. Read also PlayStation 4 SWOT Analysis

Opportunities

In the industry where Sony Inc operates both in the entertainment and the electronic and technologies have are many rooms for firms to compete. Since the desire of customers is to enjoy the variety in entertainment and electronic types, firms in these industries have many business opportunities in innovating new product and good artistry work. The globalize market in contemporary times where the world market is easily reached through improvement in information and communication technology via the internet, mobile communication systems has widened the opportunities for firms such as Sony in operating in the entertainment and electronic industry. Furthermore, there are vast markets for the product and services from these industries to developing countries in Africa and Asia. This gives Sony the opportunity to expand on its business network and area of operations.

Threats

The competition level in the electronic and technology industry is very high and thus requires effective strategy and continuous innovative products creation for and firm to curve a niche and operate successfully. Sony has many close rivals in its electronics and technology business operations that would make doing business difficult and tasking.

Furthermore, the nature of electronic and technology becomes out of vogue as new technology comes out. For instance video tape cassettes  were replaced and put out of vogue by Video CD, and in recent times DVD are now phasing out VCDs. The nature where electronic and technological product becomes obsolete stands as a threat to the operations of organization such as Sony Inc.

4.0 INDUSTRY AND COMPETITORS ANALYSIS

Sony Inc operates in an industry where the competition is very tense. In the electronic and technology industry, there are contending rivals like Panasonic, Sharp, JVC, Nokia, Beko, LG, Siemens, Motorola, Kodak, among others. Each of the organizations has its own market share, and the products that compete favorably with Sony’ electronics. The industry is a tensely competitive one, in which innovative products are created so make each one gain an edge over the other.

5.0 SONY SITUATIONAL ANALYSIS

The most challenging task facing Sony organization is its inability to adequately integrate the vast business portfolio is operates. Furthermore, there is the challenge for the organization to continue to maintain its market leadership role amidst the stiff competition in the industry.

The approach needed to resolve the integrating challenge of Sony Inc is for the organization to adopt a portfolio streamlining strategy. This is discussed more in the recommendation section of this write up.

Stringer comment “I cannot allow the generosity of Sony’s [culture] to resist certain changes. Kindness, in the end, can kill a company.” This implies that the management of the organization will not continue to engage in the culture of unnecessarily cost accumulation and wastages. Thus, it has chosen to embark on a cost effectiveness strategy.

The Leadership approach adopted in Sony Inc is a participatory leadership style where workers and subordinates input to the strategic management of the organization are welcome and observed.

6.0 POSITIONING SCHOOL THEORY ADOPTED IN SONY

At the positioning structure level, the Sony Inc has regards for the effort of its workers in the innovation of ideas and strategy for the advancement of the organization. The positioning school exhibits a strategic human resource management. Thus, workers participation in the advancement of the organization’s growth is encouraged. Strategic human resource management (SHRM) is a management theoretical approach where subordinate workers in an organization are given the chance to contribute to the strategic initiation and implementation in the organization. Participatory management is what is carried through SHRM (Poole and Warner 1998).

Sony Inc practice strategic human resource management. Even, this is reflected where Stringer set up a framework to its subordinate executives around the world for them to come up with plans, set goals on the different electronic products of the organization. Rowden (1999) argue that Human Resource Professional need to master global operating skills. They should learn to do business in non-native environments, with individual of different backgrounds and perspectives and with products and services used in different ways.

7.0 BUILDING BLOCK FOR STRATEGIC OPERATION AS APPLICABLE TO SONY INC

The building block for Competing on the Edge is to take a proactive stand in strategizing to tackle uncertainties before they occur. The management should not wait until uncertainties culminate into a surmounting problem, but should carry out scenario planning to nip problem in the bud before they start manifesting.

From the strategic framework put in place by Sony Inc, it is seen that a participatory management is encouraged where workers and subordinates have inputs to the strategic framework. This goes a long way to stand as a motivational factor to workers. Workers of the organization tend to implement more effectively those strategies they have input. This will go a long way in building a consolidated workplace where the problem of integration in Sony organization would be effectively solved.

Also, positioning strategy is exhibited in Cost Effectiveness strategy. In the organization’s bid to compete favorably, its management are reducing the cost of its production and avoiding wastages by downsizing its workforce.

8.0 DILEMMA OF THE STRATEGIES ADOPTED BY SONY

Sony Inc is trying to pursue two opposing strategies in its quest for operating change in the organization for its competitiveness. This includes engaging in workers participation in organization strategic management that would result in innovative operations and product differentiation. On the organization is implementing cost reduction strategy. This two opposing theories will get to a point where they would slow down the attainable result for the growth of the organization. According to Porter (1985:41-44), an organization can either gain competitive advantage through cost effectiveness or through product differentiation. He further argues that any organization seeking to attain competitive advantage through the two strategies would be caught in the middle and loses to those firms that do specialize.

9.0 SONY STOCKHOLDER ANALYSIS

Since Howard Stringer took over the management of Sony Japan the he had promised shareholders and other financial stakeholders to the organization of a financial fruitful year. Though, Sony had in the past experienced financial loss in its operations. For the first quarter of 2007 between January and March, the organization losses widen by 66.5 billion yen (about $578 million). This lost have affected the share portfolio value of Sony shareholders in the last five years. According to Kageyama (2006), “Sony shares have lost nearly half their value over the last five years, as June 22nd, 2006 the Sony share had a increase to stand at 4,940 Yen ($43)”. The reduction cost strategy embarked by Sony management, since Stringer took over the company leadership has made the company to observe recurrent looses from its financial operations. This has led to reduction in investment proceed for the organization shareholders for the last years till 2006.

For the first financial quarters in 2007, Sony financial operation had an improvement from previous years. Sony recorded consolidated annual sales for the year amounting to approximately $70.3 billion. 65.4% of these were derived from sales from electronics (Jehad, 2008).  With this financial improvement Sony’s shareholders stand a better chance of ripping financial rewards in the next profit declaration at the financial end of year.

10.0 PORTFOLIO ANALYSIS

Sony has vast collections of products, which has to do with any household and industrial electronics and modern day technology. In the organization’s electronic business portfolio includes Sony Ipod, Sony Plasma screen TV (among several Sony TV with 14, 21, 32 Inches), Sony Mega screen TV, Sony Irons, Sony VCD Machines. Others includes, Sony Eriksson series of mobile phones,  Sony Video cameras, Sony Refrigerators, Sony DVD players, Sony VCD players, Sony world receivers, Sony Decoders, Sony Camcorders, Sony Fans, Sony Air conditionals, Sony laptop computers etc.  Sony has several electronics for household usage and industrial usage.

11.0 MACRO ENVIRONMENT ANALYSIS

Sony has its electronic business spanning several countries. Each government of the states where the Sony organization operates has political regulations that effect its operations. In Japan where most of the electronic productions are done, the government their have created the conducive environment for the electronic industry to thrive. This has given Sony the right environment to continue to expand and create new products. Income in form, of tax to government accrued to the home country where Sony operates its manufacturing stations. Massive employment is created by the Sony operations that have brought about economy development in Japan and other country where Sony operates. Mainly, Sony operates in US, Europe and Japan. Other countries trade centers where finished products are exported. The government of the major countries Sony operates has good economy returns in terms of tax. Sony enjoys favorably environment in these country where it operate, alongside with political stability that ensure it operate effectively.

12.0 REASON FOR REJECTING THE ADOPTED STRATEGY OF SONY INC

The adopted strategy for Sony has not made the organization to continue to maximize the best out of its vast resources. This has made it difficult for the company to curve a niche for itself. Thus, alternative strategies need to be put in place to augment the operations of the Sony organization.

ALTERNATIVE OPTION RECOMMENDED FOR SONY INC

The Sony Inc should adopt a streamlining of its organization portfolio. This should be directed towards giving the various units businesses the independence to operate in the most efficient manner. Nevertheless, this should not constitute a hindrance to the seizing up of viable business opportunities and coming up with innovative business ideas and products. Furthermore financial and other resource flexibility should be encouraged to move freely among the business units of the organization this will help in period of shortages in one part of the organization’s operations, and when it becomes germane to restructure the organization’s operational structure. Here, a provision should be put in place where financial flexibility should be made to cut across the two independent organizations. For projects that are very viable for the furtherance of the organization growth and enhancement of its effective operation. Read about PlayStation SWOT

13.0 SUSTAINING COMPETITIVE ANALYSIS

For Sony to maintain a market leadership in the electronic industry it needs to introduce new technology and electronic gargets and maintain a strong and effective research base. Furthermore, the synergy and strategic alliance to keep the Sony organization to have a breakthrough in innovation and continue to maintain the lead in product creation and innovative and unique technology that would keep it ahead of other rivals is needed. This synergy should come from organization that maintains same vision and corporate culture as Sony. This will prevent forming an alliance leading in diverse direction. Thus, there is the task and challenge to choose the right partners for a profitable alliance and benefits from synergy formation. The Sony Inc need an effective leadership and right management structure to coordination the vast assets it has in order for it to maintain its leadership in the entertainment and technology industry. For instance, the PlayStation innovated by Ken Kutaragi, Sony employee, is an technology that should be maintained upon, and more innovative product that surpasses previous releases need be created and put in the ever diverse and plethora products of the Sony products on the shelf.

14.0 CONCLUSION

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Sony Business Empire, especially in its electronic business unit, is faced with the challenge to maintain a continuous market leadership and curve a niche for itself amidst stiff competition. Leadership is significant in attainting and maintaining market leadership. Sony organization needs to maintain an effective human resource planning and synchronize its vast resources for increased productivity. The analysis of the Sony portfolio shows the organization has numerous products that are of quality to sustain the market leadership for the organization. With the macro environment, analysis showing a favorable operating environment for Sony leadership issue and strategizing for improvement is significant for the sustenance of Sony leadership in the electronic industry.

REFERENCES

 Brown, S.L. & Eisenhardt, K.M. (1998), Competing on the Edge: Strategy as Structured Chaos. Boston, Mass: Harvard Business School Press.

Economic Report of the President (1985) p. 191

Flynn, B.B. & Flynne, E. J. (1996), “Achieving Simultaneous Cost and Differentiation Competitive Advantage through Continuous Improvement: World Class manufacturing as a Competitive Strategy” in Journal of Managerial Issues. Vol. 8, No. 3

Kegeyama, Yuri (2006), “Stringer Pledges Sony Turnaround: Shareholders Grumble at Sony Annual Meeting as Stringer Promises Better Days Ahead” June 22, CBS News http://www.cbsnews.com/stories/2006/06/22/ap/business/mainD8ID49VO0.shtml (23/01/08)

Larsen, Peter L. (2003), “Sony Rules Out selling Music business Media” In Financial Times London Nov. 5 P. 20

Palmer, Maija (2007), “Sony Ericsson President to step Down” Financial times London. Sep. 5, P. 26

Peter, J. Dowling, et al (2005), Strategic Management: Competition and Globalization (2nd Pacific Rim Edition)

Poole, M. and Warner M. (eds) (1998), The Handbook, Human Resource Management

Porter, E. Michael (1985), Competitive Advantage: creating and Sustaining Superior Performance. New York

 Rowden, R.W (1999), “Potential Roles of the Human Resource Management Professional in the Strategic Planning Process” in SAM Advanced Management Journal. Vol. 64, Issue 3. Pp 22

Saleh, Jehad  (2008) “Dubai International Capital’s Global Strategic Equities Fund Acquires Substantial Stake in Sony Corporation” Dubai International Capital http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/11-26-2007/0004710782&EDATE= (23/01/08)

Taylor, chuck (1998), “Sony’s stringer, Mottola get Roles in revamp” Billboard New York. Vol. 110, Issue 51, P.1, 2.

Ulijn, Jan et al (2000), “Innovation, Corporate Strategy, and Cultural Context: What is the Mission for International Business Communication?” in The Journal of Business Communication .Vol. 37, No 3. p 293

Williams, Paul (2005) “Big Two Take Lion’s Share of Market” in Music Week, 30th April

 

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