Akio Morita who was a physicist and engineer Masaru Ibuka started Sony in 1946 in Tokyo. They invested 190,000 yen in repairing electrical equipments. They started with only 20 employees and they aspired to produce their own products. In the year 1954, the company launched its first transistor and this marked the first success that the company got. In the following year, it launched another transistor that was branded as first all-transistor radio.
The company has grown rapidly since then and it has more than180, 000 employees globally. Asia, Europe North America, Latin America, Africa and Middle East are among the global markets for Sony. The company made alliances with companies in countries where there were restrictions for it to penetrate the market.
One of the problems that the company faced is the fluctuation of the currency that affected its total sales. The target market for Sony is the whole world. As a way of venturing into the global market, Sony established itself in Brazil. Brazil is the largest country in Latin America and therefore made it appropriate for the company to launch its operations there (Kaynak, 2002).
According to Kaynak ( 2002),internal and external factors are very crucial aspects of analysis in any industry since they help an organization establish existing business environment. This is because they help in controlling, leading, planning and organizing all decision-making activities in the organization.
External factors are the uncontrollable factors that affect the company and may include, political, economic, technological, social cultural, environmental and legal issues affecting a given industry. While on the other hand, internal factors are the controllable factor that affects operations of any organization.
Sony PESTLE Analysis
The company faced difficulties in establishing its market at the international level especially in Brazil due to the political factors. The pestle analysis factors show the varying laws and regulations in any country especially in Brazil. The company has been a booster of the global economy through the creation of job opportunities for the people in the host country.
However, changes in economic factors may affect the operation of the company. The way all these factors are affecting Sony electronics is the same way it is affecting the competitors of the firm. Therefore, Sony Corporation must develop plans to enable it stay ahead of its competitors (Chew & Gottschalk, 2009).
Chew and Gottschalk (2009) point out that the state of the economy has not been very good in the last few years in Brazil. The growth of the global economy has been negative and has affected the interest and exchange rates. The overall effect was reduced performance of Sony Electronics Corporation because consumers had little cash for disposal on the products provided by the firm. Sony must be aware of any restrictions that the Brazilian government has made. This would enable it to price their product in the manner that the effect will not affect the annual sales (Kaynak, 2002).
Socially, the company has gained much reputation because they provide quality products and services. However, Sony electronics must ensure that it stays ahead of technology to remain competitive in the electronics industry in Brazil. The main competitors of Sony in Brazil are Samsung and LG electronics. The company has a responsibility to implement plans that that will give a competitive edge (Luo, 2002).
Sony electronics company depends on advanced technology in the production of its goods and services. It depends on the technology to give effective productivity globally. Sony must use new and upgraded technology to remain competitive in the market. The firm should apply technology in research and development and market research so that they can use the consumer information in the production of goods (Chew & Gottschalk, 2009).
Sony SWOT Analysis
SWOT analysis is a strategic plan of analyzing the strengths, weaknesses, opportunities and treats that a firm is likely to experience in their operation (Hill & Jones, 2009).
Adults in Brazil tend to listen to music so much that the ability of Sony to introduce products that allow them to listen to music anywhere is one the strength that raises the company’s sales. The company is also able to create high quality products for its customers. The past reputation of the company shows its potential to produce reliable products to its customers is a major strength.
The employees of Sony Electronics and especially the engineers have learned from past mistakes and are able to work better and collect them. The company has been on top of the competitors making it win the loyalty of the customers. The company is able to produce a variety of products and expand its operations in south east of Brazil where there is a large market for its products. The company’s ability to partner with other companies like Phillips is an opportunity since it is able to add consumer base.
The sales of the company have been slowing down in the past years while the management of the company has failed in the implementation of the crucial strategies of the company. Some Sony products have not been attracting customers in Brazil making the company to get some losses. Lastly, the productivity of the functional departments has decreased due to lack of communication with the stakeholders of the company.
The engineering department has now increased operations and it is working hard towards the production of the products that will satisfy the needs of the customers. The company has gained more reputation since it does not copy what their competitors are doing. The company has intensified its advertising in Brazil especially for the new products in order to attract more customers. The company has changed their pricing strategies with an aim of attracting more customers.
It has reduced prices on some competitive products with an aim of attracting more customers. The company has ventured in many international markets to increase the sales as they embrace the globalization strategy and win more customers. The changing technology has been an opportunity for the company since they are able to get more customers online and are able to produce products and services that are efficient for the customers.
The greatest threat of the company has been the competitors who have also ventured into the Brazilian market. The biggest competitors are LG and Samsung. Some of the company’s products are forged and this is reducing the reputation of Sony. Some customers are shifting to the competitors out of fear that they might buy fake products from Sony.
Due to the lack of implementation of important strategies affecting the production of the company, the competitors are outcompeting Sony in the sales. The company has not yet reached the maximum point in consumer awareness therefore losing some of the customers to the competitors.
The company’s SWOT analysis helps it to identify the attribute that is essential for it to achieve its objectives. The company is also able to identify the difficulties that it faces in its plan to venture in a foreign market (Hill & Jones, 2009).
The Alternatives to Entering into Global Markets
The company can try to partner with other companies that have good reputation and have won the loyalty of consumers in order to increase sales and consumer awareness. Sony Electronics Company should start producing LCD TV since all of its competitors do and through this, the firm will be able to attract more customers.
The company may also increase added value of the products in the already existing markets in order to get more customers. This might save its costs of entering into new markets. The company can also embrace new technology in its production to increase the level of production and the quality of the products like the TVs, LCDs and Phones among others. The company can also try to sponsor some international sports for it to increase popularity among the consumers (Doole & Lowe, 2008).
Sony Functional Strategies
Technology, Research and Development
The company has to do a lot of research before it concludes on venturing into any global market. This is essential since it helps the company to position its products in the market successfully. The company must be able to identify the needs of its customers in the country that they want to venture and then formulate strategies to meet them. In this case, Sony electronics must do some marketing research to identify the needs of the people in Brazil’s electronics industry.
The company needs to establish itself internationally with an aim of maximizing its profits. The company however must be able to create consumer awareness in the least cost possible manner to reduce advertising expenses. The company should also build a strong image of the best quality in the electronic industry (Doole & Lowe, 2008).
The company has to re-evaluate the market conditions to prevent losses that might occur at the end. The company’s managers must be ready to face the risks that may be involved in its strategy to enter the Brazilian market. The company can also change the operations strategies to cope with the market of the market structure of the competitors keep in pace with them. It should be able to change the operating systems and adopt a system that will be able to reduce the inventory turnover to fewer days (Yip, 2002).
Sony Electronics Company should formulate marketing strategies that will attract more customers and remain competitive in the electronic industry. The company should also be very strict in implementation of the strategies in order to get more customers. The company should enhance product competitiveness and reform the operations in order to improve the marginal profitability. The company must also reduce the prices of some of the products like the LCD panels in order to attract more customers.
The company has to get their own source of funds to avoid borrowing from financial institutions. Sony electronics should also ensure that they maximize on their profits in order to reduce reliance on other companies. Over relying on other companies for funds may lead to the collapse of the company. The company has so far identified 5% operating margin as the source of profit. This is because the company wants to continue growing and innovating.
Human Resource Strategies
For Sony Electronics Company to succeed in the global market and especially in Brazil, it has to select well before recruiting the employees. They should recruit people with knowledge and skills that match the responsibilities that are there in the company. The company should make sure they provide training to their employees so that they can improve their productivity.
The company should also motivate the employee by giving them either the money or the non-monetary incentives. Motivation in any organization improves the productivity of the employees and the organization as a whole. The company should also maintain the already trained employees to reduce the cost of training other new employees.
Procurement and Logistic Strategies
The company’s procurement policy is to procure high quality, competitive prices and get a stable supply for the suppliers. For it to enjoy the benefits in the Brazilian market, Sony must utilize their policies of promoting fair business practices, giving equal opportunities, and transparency with their suppliers.
They also promote the collaborative relationship with their suppliers in order to get the improved quality products from them. According to Prasad (2009), Sony group has a vision of preserving the global environment so that they can fit in any country that they would like to invest in. The company also follows the supplier code of conduct to enable it to fulfill the social responsibilities of the company.
Competitive Response and other Business Risks
If the company decides to enter into the Brazilian market, it is at the advantage of creating competence in the electronic industry. The change in technological factors has influenced the level of innovation in the electronics industry. Technology has improved the quality of the products and services of Sony electronics (Kaynak, 1993).
Sony Contingency Plan
A contingency plan is an alternative that a company can implement in case the initial plan fails to operate as was expected. It allows the business to adapt to changes that can occur unexpectedly. It is developed by identifying the breakdown that may occur in the operation of the organization.
For example, Sony Electronics Company should outsource some of the raw materials so that they can concentrate on production of quality goods that meet consumer needs. The company can also outsource training services to reduce its cost incurred while training employees and also to reduce the time wasted in the process of training. The figure below shows the steps that Sony Electronics should use in the implementation of a contingency plan.
Sony Electronics Company has been the market leader in the production of the electronic products. The company has many strategies of maintaining that position in the market. One of the strategies is to embrace globalization and enter into foreign markets. One of the countries that the company has invested so much is Brazil.
This is because it is the largest Latin American country and is highly populated therefore providing a ready market. The company has identified its strengths and weaknesses in order to evaluate its operation in another country. The company has also the contingency plan so that if the initial plan fails, it will still survive in the market.
Chew, E. & Gottschalk, P. (2009). Information technology strategy and management: best practices. London: Idea Group Inc (IGI).
Doole, I. & Lowe, R. (2008). International marketing strategy: analysis, development and implementation. New York, NY: Cengage Learning EMEA.
Hill, C. & Jones, K. (2009). Strategic management theory: An integrated approach. New York, NY: Cengage Learning.
Kaynak, E. (2002). Strategic global marketing: Issues. New York, NY: Routledge.
Kaynak, K. (1993). The Global business: Four key marketing strategies. New York, NY: Routledge.
Luo, Y. (2002). Multinational enterprises in emerging markets. Copenhagen: Copenhagen Business School Press DK.
Prasad, K. (2009). Strategic management. New York, NY: PHI Learning Pvt. Limited.
Yip, G. (2002). Total global strategy. London: Prentice-Hall.