Sony: Business Analysis (Part II of III)

Executive Summary

Sony faced challenges in the recent past. The company faced economic down turn and natural disasters. In 2011, Sony lost 3.1 billion from the earthquake and tsunami that hit Japan. Sony was forced to close 10 plants. It dramatically affected manufacturing and distribution. Over the years, Sony also lost revenue in TV sales and gained a rise in competitors such as Microsoft, Vizio, and Kobo Inc. Though faced with these challenges Sony has sustained. Items such as Sony PlayStation and investments in film and production have guarded the organization against threats. Sony continues to manufacture and distribute electronic devices for consumers worldwide. This includes laptops, tablets, gaming systems, DVD players, cameras, TVs, headphones, radios, recording devices, sound systems etcetera. Their variety of electronics and devices helped sustain Sony over time.

Sony is the father of walkman, tape recorder, and beta. The humble beginnings, challenges, and innovations will continue to lead Sony into the future. In 2011 the organization earned $79 billion in revenue. They own Sony Entertainment with a hold in the film and the music industry. These are important strategies for Sony. They sustained through the economic collapse and remain afloat. Sony has capitalized on every aspect of the electronic industry. This includes amplifiers and headphones for music enthusiast. Also they produce movies and televisions for movie viewers. Sony plays a substantial role in computers and gaming industry as well. Taking electronics from every angle as made Sony what it is today.

Sony began in Japan and is now Sony headquarters. Sony CEO is Kazuo Hirari and he works to sustain and improve Sony brand. The organization has developed strategies, leadership, and culture that will sustain in the future. Working on innovative new products and expanding their target market, Sony will achieve this goal. The organization already has a strong hold in the industry. The have created new innovations, have a variety of devices and target groups, and a brand recognized across the globe. Sony has what is required to sustain in the future. Through organizational structure, strategy, culture, and leadership Sony will continue to achieve and succeed.

Sony Strategy

Sony is currently facing challenges in the electronic industry. The organization is confronted challenges in electronic sales and keeping up with technology. Trends in technology continue to exceed and grow. Electronics is not a stagnant industry. Sony must sustain and maintain new developments in electronics like digital imaging and innovative products and services. To achieve this Sony has created a business strategy around these concepts.

Sony strategy is to focus on their strengths. They are global and known in the electronic, film, and music industry. Sony designed a strategy to build on their strengths to sustain a stronghold against competitors. To do this Sony will strength all their core businesses:

  • Turn around the television business
  • Expand business in emerging markets
  • Create new accelerating innovation
  • Realign business portfolio and optimizing resources, (Corporate Strategy, 2012)

Sony set a goal to generate 70% revenue in digital imaging, gaming, and mobility options to build on this strategy, (Corporate Strategy, 2012). Digital imaging is at the core of this strategy. Finding new innovations in digital technology could be the element to improve Sony profitability. Digital imaging is an important function of all Sony electronics. Televisions, digital cameras, eReaders, PlayStation can all be influenced by improved digital image and function. It can also improve the film and music industry as well. Building a strategy around digital imaging is a creative way to sustain in the electronic industry.

Sony has developed a strategy to create accelerating innovations. Sony improving digital imaging can be transferred to all Sony devices. This will increase sales in that sector. It will also increase sales in the film industry. In this strategy, Sony can create what they call, “Sony-only technology”, (2012). Sony-only technology is based on its title. Improvements and innovations in digital imaging can be implemented into Sony cameras including still cameras and video cameras. Improvements in these devises can function together with other Sony products to produce supreme quality of digital imaging. Sony still cameras and film cameras will influence the Sony products used that contribute to these devises. This includes Sony laptops, televisions, tablets, communication mobility, PlayStation, etcetera. Through the use of signal processing and Sony-only technology, Sony can improve branding, reputation, and profits.

To maintain their strategy to improve all businesses, Sony will expand in emerging business markets. To do this Sony is prepared to “strengthen supply chain and operations, products tailored to local needs, and promote group-wide assets”, (Corporate Strategy, 2012). Areas of expansion include India and Mexico. Making headway in these target markets, Sony can encourage increased profit. This will introduce Sony products to new consumers.  Examples of company expansion in emerging markets can be seen in India. 270 Sony centers call India home, where it is the “no.1 consumer AV/IT share made possible through stable supply chain management”, (Corporate Strategy, 2012). Sony continues to capitalize on sustainability in India by operating entertainment channels and HD and 3D media promotion. Sony can use the same strategy conducted in India in other areas such as Mexico. Utilizing this strategy can improve Sony brand.

Part of Sony strategy is the “realign the business portfolio”, (Corporate Strategy, 2012). Realignment includes focusing on core businesses and ousting those that are not profitable. It also includes realigning business associations, investments, and innovations. Part of the realignment strategy is to focus on new businesses. One new business strategy to increase profitability is medical devices and technology. Sony has invested in these products to develop technology in digital medicine. This includes improved digital imaging in scanning devices and electronics. Sony is also interested in manufacturing professional devises. This includes professional cameras and movie projectors. The strategy is creative and inventive. It will help Sony increase sales and improve their quality of electronics and advancement in technology and imaging. This stronghold can help Sony meet its organizational goals, objectives and sustainability.

Sony eReader is one of many electronic reading devices in this market. Customers continue to shop for eReaders and the device grows in use and popularity. “By the end of 2012, analyst expects eBook sales to grow by 12%”, (Sankaran & Verma, 2011). The eReader is a growing market however it faces many competitors. These competitors include smartphones and media tablets. These devices are similar to an eReader. They are similar because they are capable for electronic reading. The only difference is the eReader can store books, tablets and smartphones cannot. Thus, the Sony eReader faces competition. To attack the competitor and gain opposition, Sony’s has developed a strategy within this market. The Sony eReader differs from that of its predecessor. The eReader has added value in features with improvements in wireless mobility, application accessories, and a forward model. The strategy also includes increased market campaign in target groups and regions. eReader device can be introduced in areas like India where Sony has a stronger brand and reputation. In addition, Sony will develop more “alliance with periodicals… that is diversified to gain the attention of the market”, (Sankaran & Verma, 2011).

Sony’s Corporate Structure

“Sony has long been committed to strong corporate governance”, (Sony, 2012). This is evident through their organizational structure. Early this year Sony made Kazuo Hirari chairman and chief executive. However, Sony corporate structure has changed with this new leadership. Hirari is chief executive and he shares this title with two other executive seats. This split the chief executive position into three divisions. Kazuo Hirari is chief executive of Sony Corporation, Micheal Lynton is chairman and chief executive of Sony Pictures Entertainment and Nicole Seligman is General Counsel. Together, they make up the “Company with Committees”. The Company with Committees is a corporate system observed by Companies Act of Japan. Adopting the objectives of this governance, the organization is complying with Japanese law. The company must follow the laws of Japan. However, Sony has also created their own policy of governance.

“Sony has introduced its own requirements to help improve

and maintain the soundness and transparency of its governance

by strengthening the separation of the Directs function from that of

management and advancing the proper function of the statutory

committees”, (Sony,2012).

General Counsel Seligman monitors corporate functions. This includes legal functions and communications team. Her responsibility includes monitoring US capitol as president of SCA. Lynton has different responsibilities. He job function includes Sony film and TV studios. He also works with the chair of Sony Pictures Entertainment and associates of that Division. In addition to film he also monitors Sony music. His presence in Sony Music, similar to Seligman is to manage Sony music capitol. Chief executive Hirari is left to run the company. With the responsibilities split between three individuals, this leaves him “more time focusing on trying to restore profitability in the lossmaking core electronics business in Japan”, (Edgecliffe-Johnson & Garrahan, 2012).

Over the chief executives of Sony Corporation is the Board of Directors. The Board of Directors is appointed by shareholders of Sony. The board is divided into three subcommittees. These are the Nominating Committee, the Audit Committee, and the Compensation Committee. Each committee is headed by a director appointed by the Board. The Board of Directors and their committees monitor the activities of Sony and Corporate Executives. The Board monitors and over sees the operations and systems of the organization. The Corporate Executives, on the other hand, “carry out business operations within designated areas”, (Sony, 2012).

Sony takes pride in its governance and structure. They have revamped their governance system to improve organizational functions. Sony follows the law of Japan and their stipulations for organizations. However, Sony is taking initiative to exceed legal requirements. It is a creative way to improve organizational outcomes. As a result, Sony has taken the time to ensure that managers and supervisors have clear and precise functions and operations. At the top of the corporate ladder is more than one leader. The organizational management is shared within three parties that work together as one corporate enterprise. Sony corporate governance has implemented a model that ensures “separation of the Board of Directors from the execution of business, and to advance the proper functioning of the statutory committees”, (Sony, 2012).

Sony corporate governance is designed to ensure collective organization. It also minimizes threats to integrity, reputation, and corporate corruption. The Board follows strict rules and mandates developed by Sony. This includes appointing members of the Board, corporate executives, committee officers, etcetera. The Board maintains qualifications are being met. They also monitor the chief executives to reduce risks or threats to the organization. It minimize threats to public and governments such as manipulation or monopolization for corporate interest. Chief Executives also work with the Board as a dual risk management system. The Board reduces threats made to the corporation through to Executives decisions, while Executives work to reduce risks to the organization. Consequently, Executives must “establish and maintain systems for identifying and controlling risks with the potential to cause losses or reputational damage to the Sony Group in the areas for which they are responsible”, (Sony, 2012). In addition to risk management, executives are also responsible for corporate compliance and internal audits.

Shareholders are located at the top of Sony’s corporate governance system. The shareholders are referred to as “shareholder’s meeting”. Together the shareholders make various decisions for Sony Corporation. They are specifically responsible for the management and monitoring of the Board of Directors. Shareholders appoint and dismiss members of the Board. They also appoint independent auditors. The Nominating Committee is part of the Board of Directors. Therefore, any decisions made by the Nominating Committee are first approved through the Shareholders’ Meeting. This is the same for the Audit Committee. Shareholders hire independent auditors, therefore the Board of Directors Audit Committee works with the independent auditor and the Shareholders’ Meeting. At the top of the totem pole, the Shareholders meeting has limit responsibility and does not participate in general manufacturing, investment, and distribution decisions of Sony Corporation.

Sony Leadership and Culture

Sony developed a leadership model that is applauded by researchers. The core of this model is based on energy and energy flow. The concept of energy can be observed in Sony leaders and in organizational culture. Analyst state that, “enabling energy flows though high-energy leadership is the secret to success at Sony”, (Ridderstrale & Wilcox). Scholars call this the 3E Leadership Model. The three E’s of this high energy model are

  • Envision
  • Engage
  • Execute

Applying the three E’s to leadership can help Sony gain profit margins and sustainability. This can be applied by implementing the three E’s into employee morale. A leader who is high energy and encouraging have an employee base that is also high energy. To encourage employee participation, improve operation, and increase sales, leaders apply the three E’s. Leaders are creative and able to envision a goal. They engage employees in their role and to achieve the objective. Leaders also execute their vision and realize the goal.  Consequently, “our proposed new business leadership approach is all about reducing the resistance to energy flow, releasing the potential hidden within the people in your organization, and focusing it on the activities that customers pay for”, (Ridderstrale & Wilcox).

Leaders play an important role in the workforce. They have the potential to encourage employee operations and productivity. It is essential to have quality leaders in any corporation. Sony realized this. Sony sought to find leaders to displayed qualities of what are required in this environment. High energy leadership fit this mold in this leadership model. Additionally, Sony seeks leaders who are creative, open-minded, and can “envision”. Sony leaders have a vision for Sony in the future. This vision can be manifested through the high-energy work force created through their leaders. This vision can be realized throughout regions, organizational divisions and departments. Examples are increasing monthly output expectations or creating an incentive program. The importance is quality Sony leadership. Leadership for Sony includes high-energy leaders that have vision and direction for the future.

To develop a culture that is high-energy, Sony leaders are able to engage the workforce. “It is about helping them to take part and make contributions meaningful to them and the business”, (Rodderstrale & Wilcox). Thus, Sony leaders can make any job interesting for employees. Making jobs interesting will maintain high-energy work flow. The more people are interested in their work the more they are willing to work. Employees that work in interesting and engaging environments will find they are not working at all. Leaders must engage employees in their vision. It gives employees room to increase output. It also encourages employees to develop new ideas and innovations. These can encourage sales or increase productivity. Quality leadership is essential for Sony culture. It creates an environment that is inviting, engaging, and exciting.

Executing the vision is an important “E” of Sony leadership model. Execution is what makes a quality leader. Execution can only be achieved as a group effort. Through execution the leader, the team, and the organization can realize its goal. The leader is the “personal drive to take responsibility”, (Ridderstrale & Wilcox). A quality leader can execute his vision in the workforce by controlling the flow of energy. Thus the leader is high-energy. He is able to envision a future for Sony, engage the workforce, and execute his vision. Leaders play an important role in company culture. They set the tone of energy and encourage the workforce. Without encouragement, the workforce can reduce flow. This can be harmful for Sony. Leaders are a critical investment for this brand. Consequently, Sony leaders have great qualities of leadership fundamental for the 3E Leadership Model.

The working culture at Sony “emphasizes a spirit of freedom and open-mindedness”, (Sony, 2012). Facing competitors, Sony culture impacts sustainability. Electronic markets expand and grow. They develop new technologies and create new innovations. Sony must sustain in this environment by developing electronics for the future. The culture at Sony demonstrates this. Sony culture represents Eastern culture and ideas. Sony recognizes that time is of the essence. They do not embrace over-time. They value the time that individuals use at work. During working hours, Sony employees can make the best of their time. Sony employees can shift their hours according to their needs and lifestyle. To sustain the “energy flow”, Sony offers employees benefits package to reduce work stress. Consequently, “Energy, by contrast, can be systematically expanded … Sony UK takes this approach in our ‘Worksmart’ culture to help employees achieve an acceptable work/life balance”, (Sony, 2012).

Sony vs. Kobo Inc. (KoboTouch)

Kobo Inc. describes themselves “the fastest-growing eReading service”, (Kobo, 2012). The company is out of Tokyo, Japan and founded in 2009. Kobo Inc. joins the list of Sony competitors. The company has much strength. It is an affiliate of Rakuten, the largest operator of eCommerce. In this short period, Kobo has become the top ranked application. It began as an application system for phones and resulted in the KoboTouch. The KoboTouch is an eReader device. It is home to Kobo applications including “the world’s largest eReading catalogues”. The eReader application includes millions of books, magazines and newspapers featured around the globe. The KoboTouch market is a global industry. They distribute their product and applications in nearly 200 countries. Kobo Inc. is a competitor that has grown in a short period. The company snagged market appeal from a target unreached by Sony. Sony is sustaining through its reputation and success in the electronic industry. If Kobo continues to grow at their current rate the company may be a high competitor in the mobile electronic industry.

Kobo entered the electronic world through application development. They began with cell phones such as the BlackBerry, Android and iPhone before applying their applications to tablets and now eReaders, (Kobo, 2012). The strength and core of their company is reading applications. They developed applications such as Pulse and Reading Life. Applications that have a solitary reading function are created by Kobo. This strength can be expressed in their mission, “Consumers should have the freedom to read any book, anytime, anyplace—and on any device… we’re committed to making reading a more engaging social experience”, (Kobo, 2012).   Kobo success in eReader catalogues and applications is their openness. They make it easy for organizational partnerships. Kobo does turn away information they can provide to their readers. Consequently, they have an open door policy for consumers, publishers, retailers, and hardware manufacturers, (Kobo, 2012). The more Kobo can provide to consumers the higher the demand for Kobo devices and applications. Taking advantage of this strength Kobo has become a rival contender of eCommerce.

Kobo strength is observed in their applications. Their application use allows Kobo to sustain in the market. This is because Kobo is available on every device. This includes laptops. The company took advantage of their applications and included them in KoboTouch. This makes the device a contender against the Sony eReader. KoboTouch is the only electronic device distributed by Kobo. There are four KoboTouch devices that range in size and price. The kobomini starts at $79.99 and the koboarc at$199.99. The koboglo is priced $129.99 and resembles Sony eReader. It can be used day or night and features Kobo reading application. It has an LED light and “glo”s in the dark for easy reading. Kobo provides optimum reading quality, touch page turns, dictionary, translator, and fashionable accessories. Kobo eReader sounds similar to Sony eReader. Sony reader PRS-T2 is the same size and function as Kobo eReader. Sony PRS-T2 has Wi-Fi connection. This allows readers to log on and purchase books. It has screen quality, touch screen turn pages, dictionary, library, and auto playback. The differences are small. However, small details can mean a lot to consumers. Large differences can be observed when comparing the Sony eReader to koboarc.

Koboarc is designed similar to a tablet. It has tablet functions, including internet and web browsing. The koboarc features a color screen that is similar to a tablet including applications. On the eReader-koboarc, customers can listen to music, watch movies, and read books on the same device. It includes a feature that helps chooses music, books, and movies they readers may enjoy. Consequently, the device customizes its self to the owner. This reduces confusion and makes operation easy and a rewarding experience. The strength of this device is the customization application called “tapestries”. It can organize a vacation, a schedule, or a playlist. It does all the work. The resolution for the arc does not compare to an eReader. Instead it resembles a tablet. With digital imaging and clarity it as a double function of eReader and tablet. The device comes with speakers and camera for Skype. Koboarc offers the complete package for $199.99. Though koboarc is an eReader it cannot be compared to Sony eReader. Sony PRS-42 does not have the same function and capabilities as koboarc.

 

 

 

 

References

  1. About kobo. (2012). Kobot Inc.Retrieved from http://www.kobobooks.com/about_us
  1. Corporate strategy meeting: Sony corporation. (2012, April 12). Retrieved from  http://www.sony.net/SonyInfo/IR/info/strategy2012/pdf/presenE.pdf
  1. Edgecliffe-Johnson, A. & Garrahan, M. (2012, March 21). Sony shakes up leadership structure. Financial Times, Retrieved from http://www.ft.com/cms/s/0/ad960640-7365-11e1-aab3-00144feab49a.html
  1. Ridderstrale, J., & Wilcox, M. (2006). The power of 3e leadership reenergizing the sony  spirit. Journal of Europe Centre for Business Leadership14(6), Retrieved from http://www.ashridge.com/Website/IC.nsf/wFARATT/The Power of 3E Leadership – Re-Energising The Sony Spirit – Part 2/$File/ThePowerOf3ELeadership.pdf

5. Sankaran, P., & Verma, D. (2011). Business strategy report. Business and Management, Retrieved from http://www.scribd.com/doc/59191846/1/EXECUTIVE-SUMMARY

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About Russia Robinson

I am an independent freelance writer and free thinker. I strive to use my writing talents to benefit the greater good of society, one word, one sentence, one page at a time. Originally from Richmond, California I attended San Francisco State University receiving a BA in English Creative Writing and American Literature in 2004. After this I attended post graduate studies in 2008 at Georgia’s Kennesaw State University in Technical Writing. With an academic background in English, I have spent more than 10 years’ helping young people succeed. This can be seen in my career background in education and mental health. I am a certifiable Language Arts teacher for the state of Georgia. I also worked in social services including juvenile mental health treatment services and counseling. As a result, I understand the diversity of problems people face in their everyday lives. With words put together like so, I promote equality and a healthy society for all people regardless of individual differences. Conducting research, writing articles, essays, and blogging, I push to educate others about various issues that affect people. I also do this creatively through short stories, poems, pictures, and a novel in progress. My hobbies and interest are reading and learning. I enjoy all things art and all things nature. From camping and astronomy to photography and cooking, I enjoy sighting seeing and socializing just as much as I enjoy curling in bed with a good book or binge watching TV.
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