Free «SONY Economical Aspects» Essay Sample

Report overview

This is a scholarly report that seeks to explore the economic and situational aspects that govern or characterize the dynamics of SONY. Among the factors and facets that are to be factored are: the placement of SONY as part of its marketing strategy; the scope of marketing strategies that are used by SONY; globalization and how it affects SONY; and the new inventions that SONY has made in its bid to remain a formidable force in the global market. The diversification of risks as a strategy that SONY uses to stay afloat amidst fluid market situations such as competition and the much recent global economic recession is also debated in the paper.  

Company overview

SONY's case presents an interesting readership given that it showcases a classic story of the manner in which proper management skills and business strategies can turn a small scale shop into a renowned and respectable multinational. Specifically, SONY's case is one that started off as a repair shop that had rented a bomb riddled departmental store building in Tokyo, Nihonbashi, having been started off by only two young men, Akio Morita and Masaru Ibuka. This was in 1945, during the World War II. Nevertheless, through its commitments to its business goals which aimed at "Experiencing the joy of applying and advancing technology for the public's benefit," SONY has continued to remain the world's number one company in electronics business.



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Sony is a Japanese based firm that deals with the manufacture of electronics. It is the second largest firm in this line of production. The activities of the firm are diversified across electronic production such as entertainment, games and the provision of financial services.  Apart from this, the corporation is engaged with the designing, manufacturing, developing and the selling of the various products that it produces. The firm is headquartered in Tokyo Japan and it is known to employ over 180,500 people, this is according to the statistics taken in 2008 (Gary et al. 2009).

The firm in conjunction with its subsidiaries is geared towards carries out its operations in over 200 countries. The firm's operations and activities are divided into five segments; these are the games, electronics, pictures, financial servicers and others.   During the financial year that ended in March 2008, the firm recorded revenues amounting to approximately $77.8 billion which was an increase of about 6.9 % in relation to the firm's performance in 2007. The group's operating profits were $3.3 billion during the 2008 financial year, there was a mare improvement in this performance form what the firm had made in the year that ended on March 2007 of approximately 3.6 %increase.   

Economical aspects and situations of Sony

Sony is considered one of the world's biggest corporations and is grouped among the very important and essential consumer electronics manufacturers. Through the reputation that the firm has already gained, it is socially expected to do better than majority of its rivals. Despite this, the economic crisis that has been encountered in the recent past has given Sony a beating. According to some of the financial statements from the firm especially the one representing the 2006 financial year, there was a clear indication of 78.1% decrease in the firm's income as compared to the previous year.  The 78.1% was arrived at after a deduction of taxes. Further reports indicated that the most contributing factor to this decrease in total income was as a result of a decrease in the Japanese stock market especially in relation in the segment of financial services (Gary et al. 2009).  The firm's said to have lost approximately $385 million which is equal to around forty billion yens.  The failure of the firm can also be associated to the various ventures that the firm entered into which have not been able to fair well as anticipated.  T the same time, Sony recoded a loss of 3.1 yens in its equity and a deterioration of approximately 2.6 yens each year. All this was blamed on the costs incurred in the restructuring process and the continuous decline in the world wide music market.

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Despite this constant failure that the firm has encountered in the past years, the sale of its electronic products had a low decrease of 0.6%; this is due to the appreciation of the yen against the US dollar. The increase in sale of products such as VAIO PCs and BRAVIA LCD are owed the slight decrease in the income received from the sales (Levitt, 2003).  This does not imply that the firm is failing all that is happening in the firm is a clear reflection of the happenings of the entire world.  The sales section experienced an increase of 10.4%.

This increase was as a result of the constant increase in the sale of PSP consoles and play station 3. The revenue was also boosted by an increase in motion picture viewing. Before Sony was created, there was a very bad reputation of the Japanese manufacturing industry. Electronic products from European and America were considered powerful, but Sony was able to change this perception. Morita and Ibuka were abler to transform the firm into an electronics leader in the world. 

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Levitt, (2003) asserts that the play station by Apple and Google is currently the hottest gadget in the market, but these two firms should be warned because Sony is planning on coming up with inbuilt play station phone. The firm is currently on the initial stages of manufacturing a gadget that encompasses of a gaming console to a cell phone. With this device, the firm is expected to cater for its two segments that are currently fetching the firm the highest revenues i.e. the mobile telephony and gaming segments. This is because the play station by the firm and the Sony Ericsson mobile have proved to be very successful in the market. The management of the firm presume that having the two devices working as one is something very plausible. 

The idea has well been received by a number of analysts who think if the idea comes into materialization will boost the firm's performance and thus giving it a competitive advantage over a number of its rivals. With the increase in the demand for high quality musical devices, Sony has identified an opportunity of coming up ways that will enable it invent new ways that music can be enjoyed, this includes coming up with recommendations and searches.

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According to Gary et al. (2009) the firm is geared into becoming the world's largest electronic manufacturer and this can only be achieved by addressing major sectors of the firm and ensuring that the set goals in these sections are achieved with less or no hiccups. Some of the techniques and strategies expected to be followed include realizing that the entertainment industry and the consumer electronics have joined forces and should interact cordially to ensure that objective goals are set and ways of achieving them structured. Secondly, the firm is looking forward into becoming a service enhanced industry; this will prevent their services from becoming obsolete. 

The firm is also geared to ensuring that their products are made in a multi functional structure, this enable consumes to manage the products across different environments (Levitt, 2003).  The fourth strategy ensures that the innovative technologies forwarded by young innovators are supported thus creating a variety to the consumers to choose from. Lastly, the firm should be in a position of creating new stream values that are geared towards the creation of overall improved devices. The quality of the products that the firm is offering has given it a good reputation. In addition to this, there is been a boost in the mass production especially with the rise of a number of rivalry firms that are coming up.  As it has been witnessed in the previous years, the firm has been experiencing losses in a number of products; the sale of other products has been low too. This has led to the firm lacking a direction sense regarding to how it is being directed (Gary et al. 2009). Other hiccups have also been faced due to lack of communication within the various departments of the firm.

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Sony at the moment continues to enjoy economic and other socio-political situations that help in ensuring its marketability. Particularly, Sony continues to enjoy the use of effective distributive and manufacturing strategies. Knowing the rapidly expanding market that is extant in Japan and China, by 2005, Sony had already made inroads into Japan, a market that has over 50% of its electronics' segment's annual production. To this effect, Sony has been able to serve the market with products with high demand. Some of these products are: video cameras; digital cameras; personal computers; flat panel televisions; components of semiconductors such as Memory Sticks and batteries and semiconductors.

Sony's economic aspect can be also ranked as being topnotch, given that it has incorporated the diversification of risks by spreading its market. At the time, China accounts for over 10% of Sony's annual production. In the same wavelength, Sony's diversification of the market is seen in 70% of its annual production being destined for other regions apart from Japan and China. Sony's merchandise is widely distributed in rich markets such as the US and the European Union, though it is pointed out by observers that Europe and the Americas put together, only account for less than 25% of Sony's total production, annually. Part of this relatively low productivity in Europe and the Americas can be attributed to competition stemming from other fully fledged electronic organizations such as Kenwood, Pioneer, Samsung, Technics, Tatung, Aiwa and Sanyo, among a host of others.

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As far as statistics are concerned, Sony was able to make sales amounting to 1,873,219 in Japan, 2,307,658 in Europe, 1,827,812 in the US and 2,041,271 in other areas, in the year, 2009. This shows that Sony is far much ahead of its competitors, having made inroads into foreign markets (Levitt, 2003).

Another important economic aspect that Sony continues to enjoy as a market leader in electronics is seen in its positive and well cultivated public image and relations. Sony is known for producing high fidelity sound, visual and electronic systems that are attractive, sophisticated, reliable, fashionable and classy. For instance, Sony music systems are reputed to be among the most reliable in terms of quality sound, up-to-date utilities and portals, durability and even aesthetic beauty.

These same qualities above do not escape Sony cameras, TVs, PCs, laptops, phones, earpieces, microphones and video players. As if this effort is not enough, as a way of curving out its own niche and respectable public and market reputation, Sony ensures that in every market it has ventured into, there are several service rooms allowing for the repairing of malfunctioning electronic Sony equipment. These Sony service rooms are always restricted to servicing Sony products, whilst similarly; Sony products are always restricted to repairs by the personnel in the Sony service centers.

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Normally, Sony ensures that its products are accorded at least a one year warranty that ensures that newly bought but malfunction products from Sony showrooms are able to be either replaced or serviced at no charges. This has always given Sony a world class reputation among its competitors and in the mind of the market.

A walk into Sony showrooms reveals a class of sophistication, aesthetic and artistic design that is under the command of Sony. In these Sony center showrooms, an assortment of Sony appliances is set on racks for public viewing, with some of these appliances being put on the playing mode for both demonstration and convincing potential clients into buying. Among the assortment may come the TV sets, radio and music systems, walkmans, Discmans, cameras for both civilian and police use, among others.   

The aforementioned positive public image that Sony enjoys is also hinged upon the role Sony has played in corporate social responsibility (CSR). It is out of Sony's efforts and commitments towards environmental conservation that it was ranked the sixth in Greenpeace Guide to Greener Electronics. Sony has been committed to Greenpeace Guide to Greener Electronics' objectives which is mainly to assess policies on toxic chemical substances, promoting recycling and controlling climate change, by working with the top 18 leading manufacturers in electronics. The commitment of Sony towards environmental wellbeing is seen in its plan to remove brominated flame retardants (BFRs) and toxic vinyl plastics (PVC) in its mobile wares by April 2011.   

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Further commitments by Sony is seen in its invention of the flat panel 32 inches Bravia KDL-32JE1 which consumes energy, 70% less than conventional models. Yearly, this green TV reduces carbon dioxide emissions by 174 pounds (Levitt, 2003).

Nevertheless, it is a fact that cannot be discounted, the prospects of Sony suffering in the hands of stiff competition from dealers that operate in providing products and services that are similar to Sony. Adding to this twist, the growth of IT advancements, the demand for Sony products and suffers have continued to dwindle. Specifically, through high powered home theater systems, the place of Hi-Fi radio systems have been virtually rendered redundant, given that the home theater systems can be used for playing audio, visual or audio visual records, DVDs, CDs or CVDs. Similarly, that the emergence of the iPhone and the iPod allow for storage of huge volumes of data is a development that has continued to undercut the marketability of Sony products.

IPhone and iPod for instance allow for storage of video and music files, and readable data, thereby curtailing the marketability of DVD and CDs, for both Sony and its competitors. Coupling this twist to the now receding global economic recession, one is able to see that Sony has not been able to make successful volumes of sales and production. It is against this backdrop that Sony has been compelled to carry out some turnarounds, mostly in the form of downsizing. As a matter of fact, on December 9th, 2008, Sony Corporation made it public of its intention to make 8,000 job cuts. Additionally, Sony wants to plummet the size of its global manufacturing locations by at least 10%.  This effort is to be followed up with the downsizing of the 8,000 contractors; with all this effort being premised on the perceived need by the organization's management to save 1.1 billion dollars, at the end of every fiscal year (Erceg, Greenstein and Tjandra, 2002).  

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Given the vagaries, uncertainties and competition that shape the market, it is important for Sony to consider exploiting other avenues that will ensure increased marketability for its products.  One such a move is partnering with other firms to ensure more success. For instance, through partnership with companies that deal in materials provision, Sony will be able to access readily and at cheaper rates, necessary materials such as tools, wires, cables and chemical substances necessary for production of Sony products. This may help Sony realize the 1.1 billion dollar savings it is trying to realize through downsizing- a feat which although good, yet if unchecked, can leave Sony exposed to high (employee) turnover.


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