Sony: Business Analysis (Part III of III)

Executive Summary

Sony is the father of walkman, tape recorder, and beta. The company began in post WWII Japan with prospects in the electronics and communications industry. Today, Sony is globally recognized. They have several reputable industries throughout the market that will continue to lead Sony into the future. 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.   In 2011 the organization earned $79 billion in revenue. They own Sony Entertainment and involved in the film and music industry.

Sony faces challenges in their external and operations environment. This includes new entrants, technology, and natural disasters. Sony PlayStation must rival against Microsoft Xbox, and now Nintendo Wii. The eReader market should be highly profitable with eBook to print-book ratio is 242:100 in Europe, (Sankaran & Verma, 2011). The external environment for eReader provides a challenge for Sony. The eReader must now complete in the iPad and Tablet market. These devices offer some of the same functions as eReaders. Despite this, Sony has sustained a competitive advantage with function and performance value. Sony also faced other challenges in their external environment. This includes 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 CEO Kazuo Hirari 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 has a strong hold in the industry. The created new innovations and have a variety of devices, target groups, and a brand recognized across the globe. Sony’s new innovations include eco-friendly products that reduce environmental impact and save energy. Sony has drive for the future. Consequently, Sony has what is required to increase profitability and future success. Through organizational structure, strategy, culture, and leadership Sony will continue to achieve and succeed.

 

Conclusion

Sony is a global company known worldwide for their electronic devises and role in the music and film industry. The company has left no electronic untouched. Their market reach, technological discoveries, and investments helped Sony thrive for more than 50 years. Sony currently faces challenges in the external environment and are sustaining. The company suffered significant losses in the industry and can only keep up with innovations in technology. To sustain in the future, Sony must develop a competitive business environment and innovations through technology research, (Sankaran & Verma, 2011). To combat these challenges, Sony has modified their business strategy for the future. This is demonstrated by improving their organizational structure, implemented a successful leadership strategy, and expanding their role in the global environment. These are important strategies for Sony. It can improve their band, competitive advantage, and profitability. Sony has developed a business strategy that will reposition Sony and their influence in the industry. Sony has capitalized on every aspect of the market. They participate in music investment and production. This includes sound equipment like amplifiers and headphones for music enthusiast. Sony has also capitalized on the film industry to include still cameras, film cameras, professional cameras, and projectors, televisions, and film production. Electronics is the core of Sony. Consequently, Sony plays a substantial role in electronics. Manufacturing electronics from every angle as made Sony what it is today. Sony has taken the steps to effectively manage the electronic enterprise. They changed their organizational structure, strategy, and made necessary decisions for future profitability and success.

 

 Sony’s External Environment

Operating Environment

Sony first began this enterprise out of Tokyo, Japan. The corporation was able to meet the entertainment needs of the public through their electronic devices. To meet supply demands, Sony expanded to Hong Kong in 1959, Germany in 1970 and the United States in 1972, (Yuki, Sylvia, Caitlin, & Casey, 2011). Through these offices, Sony sold and distributed products like televisions and manufactured other electronic products as well. Throughout the 90’s Sony was a top rival in television sales. Currently, the Sony has observed high profitability in smartphones which has experienced a 26% growth in 2011, (Sankaran & Verma, 2011).  Sony is a global enterprise, with past reputation for innovation and technology. Thus, Sony is reputable worldwide.

Sony manages supply chains and operations through Sony Supply Chain Solutions Inc, (Sony SCS). Sony SCS is responsible for all operations including “development, provisions, solutions, procurement of parts, raw material, and repair parts and services”, (Sony, 2012). To manage supply chain operations, Sony SCS divides supply division chains:

  • Domestic distribution operations
  • International distribution
  • Parts procurement
  • Customer Service

Sony is able to manage supply chain operations, maintain communication, and supply demands of the consumer. The company is able to meet consumer demands conducting operations in different areas that function as regional hubs. This includes areas in the United States, Europe, and China. Sony distributes goods by air and sea from import and export operations in Japan. To encourage product expansion Sony is open to overseas manufacturing. Consequently, Sony is often recruiting new businesses to sustain operations of Sony services, products, and devices. “Our goal is to become the world’s best company by developing the most advanced supply chain of the world”, (SonySCS, 2012).

 

Industry Environment

External factors are observed in Sony competitors. Because of the wide range of electronic devices that Sony distributes, they face aggressive competition among other companies in the market. Competitors in Television include Phillips, Sharp, Panasonic, and Toshiba. Competitors in computers include Dell, Apple, and Hewitt-Packard. Competitors in eReader devices include Amazon and Barnes and Noble. This wide range of competition across electronic technology can be difficult. This makes decisions even tougher for the consumer considering the regressing economy. Prior to 2008, many people across the world lost their jobs and their homes. People who once had a high comfort of living are now middle class. Today, many people cannot afford these products. Families are forced to consolidate, minimize, and reduce. Therefore, consumers must prioritize their materials and resources. This means cutting down cost for electronic and digital entertainment. To maintain growth and revenue, Sony must stay ahead of its competitor. It has done this by offering better products and services including those that are not available from their rivals. This can be accomplished by making Sony an easy choice over their competitors.

Remote Environment

Sony is a global industry. With expansion come problems. As a global industry Sony must follow law and policy of different nations. This created conflicts between Sony and government law. For instance, Sony was investigated for breaking anti-dumping laws in the 1970’s and later was forced to close down their American plant due to new laws on foreign policy, (Yuki, Sylvia, Caitlin, & Casey, 2011). When it comes to international policy, “governments may change or increase trading restriction which would definitely change the way Sony works”, (Maqsood, 2010). Governments have the right to increase taxes, minimum wage, standards of environmental control and safety. As a result, Sony must stay ahead of the game. They must practice high standards of business ethics and morality. This will ensure that Sony will not be affected by changes in government and foreign policy. As long as Sony goes above and beyond to meet the needs of the consumer, the government, and greater society, they should have minimal impact from these changes. Sony has also responded by better managing and regulating business ethics and moral concerns to keep issues such as this from occurring. This allows Sony to expand without difficulties and roadblocks. It prevents loss of revenue and meets supply demands.

“Economically, due to this many changes can occur such as the interest and exchange rates”, (Maqsood, 2010). As a global corporation, exchange rates are futile to pricing, shipping, and manufacturing. Especially considering the economy, high exchange rates could mean reduced revenue. Many consumers are less likely to purchase high priced products during a recession even if it is because of high exchange rates. In this way the economic down turn has drastically affected Sony profitability. The weakened economy can also be associated with recent natural disasters especially across parts of Asia. Last year’s flooding in Thailand and the tsunami in Japan affected Sony operations. The earthquake and tsunami in Japan caused 10 Sony plant closures in addition to operations affected in Thailand. Weather and natural disaster has significantly impacted Sony. In additional to the competitive market and rivalries in innovations and technology Sony has suffered 2.9 billion in net losses at the end of 2011, (Layne and Kubota, 2012). The mixture between the economy and natural disaster has not helped Sony’s external environment. Therefore, Sony must continue to make a name for its self and encourage consumers to purchase Sony items.

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 Governance operates top tier to the 5 pillars of operation. The 5 Pillars Of Operation define Sony’s organizational structure. The structure provides example of how Sony structure and organize their business to provide maximum performance, operation, distribution, and development. The 5 pillars of operation include:

  • Electronics
  • Entertainment
  • Financial Service
  • Gaming
  • Internet Service

 

Sony foreign operations manage daily responsibilities of company. Sony headquarters is able to focus responsibility on global hub operations and electronics. This includes electronic development. “Global Headquarters develops corporate wide strategy and to promote strategic intragroup alliances among the 5 Pillars Of Operation”, (Sony, 2012). Global Headquarters also function as Electronic Headquarters. Electronic Headquarters is responsible for strategy development. Consequently, they must also correspond with the other 5 pillars of operation. Electronics acts as the center of the organizational structure. This ensures consistent communication throughout all 5 pillars of operation. Global Headquarters operates in conjunction with Electronics Headquarters, both epicenters of the other corresponding pillars, Gaming, Internet Service, and Financial Service, and Entertainment.

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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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