Content 1. Executive Summary 2. Introduction 2. 1 . Overall Company Background 2. 2. Brief proportion of business 3. From Core Competency to Diversification 3. 1 . Core Competency 3. 2. Joint Venture and Diversification 3. 3. Restructuring Todays Sony 4. Recommendation 5. Conclusion 6. Reference 7. . Executive Summary Sony started the business as a small electronics shop and after 67 years hard works, Sony has became one of leading entertainment company in the world now. Keep innovate on new technology is one of the core element to make continue success of Sony.
Moreover, Sony has became a global conglomerate corporate group, so to keep organization growth and sustain in a long run, corporate strategy becomes much more important to Sony In this report, we will review the following issues: 1) Overall company background and brief proportion of business, 2) From core competency to diversification, 3) Todays Sony, and future perspective 4) Recommendation and conclusion. After reading this report, you will have a better idea about the current corporate strategy of Sony and recommendation for coming corporate strategy. 2. 1 Overall Company Background
Sony Corporation was founded in 1946 by Masaru Ibuka at Tokyo, Japan as an electronics shop inside the department store. In 1956, Sony launched the first commercial use transistor radios which had a big success. Sony started to establish the business by innovate new technology electronic products from past 60 years, Sony had launched many different innovative and successful electronic products like, color television, video recorder, Walkman, compact disc Walkman, mini disc Walkman, PlayStation, Led television, cyber shot camera, personal desktop, notebook computer and Blu-ray home theatre system.
Furthermore, Sony had become a global conglomerate corporate group in Japan and which Sony Corporation is a listed company in Japan, United State and United Kingdom. With the big success, Sony Corporation started to develop and expanded into many new businesses like music, motion pictures and video game and finical business as well. Sony Corporation became one of the most focus and competitive entertainment organization and also leading electronic products manufacturers in the world. . 2 Brief proportion of business Sony have four core business segments which are electronic (TV, IT and AV products), ame (Playstations, PS3 and PSV), entertainment (Music, pictures and TV) and financial services (Banking and insurance services) to help to diversified business in different sectors. Sony Corporate mainly handling electronic business includes video games, medical business and network services. Sony Corporate also as a mother company for Sony Group.
Sony Group is holding Sony Pictures Entertainment (for motion pictures), Sony Computer Entertainment (for game), Sony Music Entertainment (for music), Sony/ ATV Music Publishing (for music publishing), Sony Financial (for financial services), Sony mobile communication and others. From Core Competency to Diversification core competency Core competency is the technology coordination across the organization. Sony was focused in TV, Audio & Video business by develop sets of multiple technology stream, and it was the “Roots of Sony’s competitiveness” (Prahalad, 1990).
Sony adopted the share activities strategy (Porter, 1987); share core competency to the core products and increase the competitiveness. Telecommunication Telecommunication engineering was developed by Tokyo Telecommunication Engineering Corporation (the fore company of Sony Corporation), who firstly stablished by Mr. Ibuka, and it was shared to both TV & Radio product. Video and Audio Recording Another core competency is video and audio recording technology. It supported the home/personal audio, video recorder, video camera and broadcasting & professional.
Sony developed and produced both the recorder machine and tape, and the complementariness of product made Sony’s as the market leader of the audio and video. Semi-conductor Semi-conductor technology was another major competency, which supported Sony’s core products business. Sony developed its own transistor, which are the critical omponent for the radio, television and digital camera. It was the roots of Sony’s competitive advantages and supporting Sony’s core business.
Indeed, even the camera company with a leading position like Nikon and Sigma are using the “CMOS” the sensor chip of the camera, which are producing by Sony. 3. 2 Key Joint Venture & Diversification Corporate strategy is means a way to “create value through the configuration and coordination of its multi-market activities” (Collis & Montgomery, 1995). Sony use its unique capabilities and resource for maximize value through Joint venture with usiness partner for formulating competitive advantage.
Tektronix, Tl is the key partner who had enhanced Sony’s semi-conductor technology. Tektronix’s oscilloscope technology is critical and helped Sony’s made a breakthrough in the semiconductor. Masaru Ibuka and Akio Morita did not position Sony as a Technology brand, they wanted to “be pioneers, to take on new fields, and build a corporate group recognized around the world. ” This philosophy was the foundation of Sony’s diversification business. Later, Sony started the insurance business by the Joint venture with life insurance company Prudential in earlier of 1975.
Furthermore, Sony started the development of camera on 1981. Sony further expanded into the camera business and strategically acquired Minolta at 2006, a hundred year historys camera company, which possess the single lens reflex (SLR) technology. It assisted Sony entered the Digital SLR market, and Sony launched the first DSLR in year 2006. Barber and Goold (2007) suggested the portfolios are not strongly linked would create contribution to the shareholder of the public company.
Above Joint venture, acquisition demonstrated Sony’s strategic move is not concentrating on related usinesses, thus the corporate strategy sustain Sony’s growth. 3. 3 Restructure Norlo Onga was tne person wno cnangea sonys organlzatlon structure . Based on nls insight on the Japan’s institutional context, he believed in that the core competencies businesses were not sufficiently competing with industry rivalries. Restructuring strategy would diagnose the weakness and identify the new business opportunities or phase out the non-profit business (Porter, 1987).
Ohga established business group system; consumer electronic products, professional products and OEM component usiness to respond the challenge. The organization structure was redesigned, and business group governance was moved to corporate level and business units autonomously operated under Sony Corporation. 4 Todays Sony Sony is ranked 87th on the 2012 list of fortune global 500 (Fortune Global 500 2012). Although technology breakthrough cause some of the competencies deteriorated, but Sony is still continuously developing their core competencies and keep them apply, share and grow.
Today, Sony still maintains the leading position in Semiconductors and Components categories. Moreover, as mentioned above this core competency not only benefit to Sony’s others business segment but also able to provide different business opportunity for Sony’s Joint Venture with other company in coming years. Moreover, Sony is a well diversification company, and all businesses accounted average around 20% of total revenue. Moreover, the values of different business segment are further expanding to different business sector.
For example, Mobile Products & Communications is supported by the strong core semiconductor competency, furthermore Imaging Products and Solutions is supported by the dvance experience on produce powerful sensor and chips for digital camera, so the competitive advantage of Sony’s will be strengthen by the strong interlink between others business and I believe that Sony will able to acquire bigger market share in coming five years for both sector. On the other side, Sony also has moved to other business such as finance, music (Sony Music), picture… tc. Entertainment business request for huge investment and also with certain risk of return, Indeed, both segment generated excellent operating return to Sony in 2012 and 2013, and I agree hat the return will counteract the risk and able to create value to Sony. For the Financial sector, it achieved continue positive operating income in last 5 years and which able to provide useful experience for Song on financial and investment solution for maximize the return of equity.
Negative Prospective of Sony Even I realize that Sony able to maintain continue success for above mentioned business with using its appropriate corporate strategy, however negative prospective are also formulating by other sector of Sony’s business, for example, both Home Entertainment & Sound and Game sector recorded loss in 2013, Thus, The market position of TV business is declining and only able to maintain the ranking of the third largest production in 2012 and 2013.
Moreover, the TV segments which has been making a loss for the past eight years and I realize that TV business will continue affect by different negative factors, which included high cost of TV production line in Japan, rival competition with Samsung and LG, higher cost of packing and delivery Decause 0T product slze, wltn nlgner marketing, OlstrlDutlon cost as marketing need o keep developing new market because of long product life cycle of TV, Apart from TV business, Game business also recorded declining operating income from 2012, 29. 3 billion to 2013, 1. billion yen, as the rapid development of internet speed, more and more customer are using video game console like Microsoft xbox360, Sony PS3 or computer for playing ” online ” game, however, Sony direct competitor Microsoft Xbox 360 has already built up extremely strong online infrastructure for its online game business, it able to provide more faster, stable and secure linkage between orldwide gamer than Sony, So professional gamer will more focus on using Xbox360 with a better game performance, furthermore project that more casual game player will choose to play video game with their mobile device instead of buying video game console, So, I project that a negative result will be generated in coming 5 years for both business sector. 5 Recommendation Collins & Montgomery 1995 stated that firm corporate strategy is the way to align its resources and mix of business with its organization structure, system and process.
Under the pressure of the profit decrease, Sony needs to rethink the current orporate strategy and determine how to coordinate its resource and capability for maximize value with using corporate structure strategy, diversification strategy for further create value by Joint Venture and two side market strategy. Detail recommendations for different business sector as below. TV Follow with rapid technology development, customer behavior and experience are keep changing and transforming, for example, watching TV, play games and shooting photos with their mobile device and share their experience to the social networks, So as to fulfill the raising demands of customer on the integration function between roducts and for maximize value to the customer and willingness to pay. I suggest Sony to formulate new department for coordinated Sony resource and capability for define any integrated solution across Sony’s product and service.
Game As more and more customer are playing games with their mobile device, Sony should start JV with mobile game developer for produce new game platform for Android and IOS system, suggest using two-sided markets (Eisenmann et al. , 2006), and use mobile as a platform for linkage different group of customers for maximize corporate profit. Home Entertainment & Sound Due to customer practice for enjoy entertainment is changing also, more customers focus on using the mobile device, tablet and computer for watching TV and others entertainment. Suggest strategy for Sony Home Entertainment & Sound sector as below: 1 . Decrease the overall own production and JV with others electronic companies. 2. Selling only TV panel to others company for produce OEM products. 3. Only focus on develop and produce high-end TV, e. g. Ultra HD 4K TV.
Imaging Products and Solutions For the Imaging Products and Solutions business, Sony should expand JV with others op ranKlng camera producer, sucn as NIKon ana HasselDlaa, For NIKon, since most 0T high end models are using “cmos” which are produced by Sony, Sony should use this cooperation experience and expand the degree of cooperation for produce lens adaptor for Sony Camera to use Nikon’s Lens, this co-competition model able benefit the sales of both Sony’s Camera Body and Nikon Lens. For Hasselblad, Sony could provide excusive sensor and technology experience to Hasselblad for produce professional grade model, Since Hasselblad is almost the best in class company, and such cooperation able to bring Sony Brand to the top of the industry.
Sony Entertainment For Sony’s entertainment business, suggest Sony to formulate new department for centralize the promotion of music and movie products, as most of the physical video and audio shop are combined and selling both products, as most of the customer prefer to buy both products in a single location, at the same time more and more customer are prefer buying music and movie online, however, customer now need to access two different web site for purchase Sony’s products, hence, the customer buying desire have been reduced , moreover, this new department can focus on romote products for recent three major channels of customers, which include, mobile device, computer and TV (with web browser) user, indeed Sony contain all three types of products. Conclusion Comprehensive and success diversification strategies are able to be identified at Sony and proven by the financial result, especially the stable and positive operating income generate by the entertainment and financial segment, however the continued success will determine by how Sony’s ability on integrate those service and products as mentioned above, moreover Sony should absorb the similar failure experience and ot using any strategy which have potential limitation of development for any other sector, for example, Sony developed its own MS duo memory card for the camera before and omit the rapid development and global usage of the SD card, so customers buying desire were reduced by which MS duo is not compatible by others cameras.
Hence review recent situation of Sony TV business, Sony should not insist to focus on produce TV with recorded 8 years negative operating income and save and transfer those resource and capability to others profitable business. ReTerence: I Anand , B Jayanthi, S 2005 , ‘Course syllabus :Strategy of unrelated diversification Harvard Business School Publishing , HBS 9-705-480 | Barber F. and Goold M. 2007, The strategic secret of private equity, Harvard business review, v. 85, no. 5, pp. 12-20 I Collins, DJ 7 Montgomery, CA 2005,Corporate strategy : a resource based approach, McGraw Hill Irwin Boston. I Collis, D & Montgomery, C 1995, ‘Corporate strategy: A conceptual framework, Conceptual note, HBS 9- 391-284. Eisenmann, T, Parker, G & van Alstyne, MW 2006,Strategies for two-sided markets’, Harvard Business Review, October, pp. 7-18. Prahalad, CK 1990, The Core Competence of the Corporation, Harvard Business Review, Boston. I Porter ME. , 1987, “From Competitive Strategy to Corporate Strategy’, HBR Review, v. 65, no. 3, pp. 43-59 1 Sony Annual Report 2013, Sony Corporation, viewed on I-Nov-2013, http://www. sony. net/Sonylnfo/lR/financial/ ar/2013/shr/pdf/AnnualReport_E. pdf I Sony Corporation, The New York Times, viewed on 5-Nov-2013, http://topics. nytimes. com/top/news/business/companies/ sony_corporation I Sony History, Sony Corporation, viewed on 4-Nov-2013, http:// www. sony. net/SonyInfo/CorporateInfo/History/history. html