COMPANY OVERVIEW AND HISTORY Sony Corporation is engaged in the development, design, manufacture, and sale of electronic equipment and devices, as well as game consoles and software. It is also engaged in the production and distribution of motion picture, home entertainment, television products, and recorded music. Further, Sony is also engaged in the financial services businesses, including insurance operations through their Japanese insurance subsidiaries and banking operations through a Japanese Internet-based banking subsidiary. Sony’s primary manufacturing facilities are located in Asia. They have a broad sales network, registered in approximately 200 countries and territories. Primarily, Sony’s products are marketed in Japan, the United States, and Europe. Sony has a history of more than 60 years. In 1946 in Nihonbashi, Tokyo, Masuru Ibaka and Akio Morita founded a company called Tokyo Telecommunications Engineering Corporation, also known as Totsuko, with start-up capital of 190,000 yen for the research and manufacture of telecommunications and measuring equipment. After moving their head office and factory to Shinagawa, Tokyo, they successfully produced and launched a power megaphone and completed the first magnetic tape recorder prototype that was produced and launched in early 1950 and called the G-
Type. In the early 1950’s Ibaka traveled to the United States and came across Bell Labs’ invention of the transistor. He negotiated with Bell to license the transistor technology to his company intending to apply it to communications, while most American companies were looking for military applications. In 1955 they launched Japan’s first transistor radio, the TR-55. While they were not the first to produce the transistor radio, they were the first to make it commercially successful as the product took off in Canada, Australia, the Netherlands and Germany as well as within Japan and continued to be a good seller till the sixties. In 1957 Totsuko produced the TR63 model, the smallest transistor radio in commercial production at the time, which was a worldwide success, ultimately cracking open the American market and launching the new industry of consumer electronics. One year later, in January of 1958, they changed the company name to Sony Corporation. The name Sony was chosen as a mix of two words. One, the Latin word “Sonus”, the root of sonic and sound, and the other “Sonny” the familiar colloquial term used in America at the time to call a boy. The Sony Corporation of America (SONAM) was established in the United States in 1960, and they became the first Japanese company to offer shares in the United States in the form of American Depository Receipts on the OTC market of the New York Stock Exchange in 1961. Their shares became listed on the NYSE in 1970. 1
Sony released the famous “Walkman” in 1979, which was a worldwide success. In 1982, they introduced the world’s first CD player, soon followed by a portable version called the “Discman”. They began foraying in to cameras in the 1980s producing a wide variety of consumer-use still cameras and camcorders. In the 1990’s they began producing home-use PC’s launching their “VAIO” series. Around the same time they launched their wildly popular PlayStation gaming consoles, originally in a joint venture with Nintendo but eventually spinning it off in to a product of their own. Today Sony is a well-known technology company with a very diverse product line ranging from their original line of products, home audio, to recording media to robot. Sony as a corporation has grown dramatically over the years. Not all this growth has been organic; they have undertaken a variety of joint ventures and acquisitions and have accumulated a number of subsidiaries around the globe over the years. In 1968 CBS/Sony Records Inc., a 50-50 joint venture with CBS Inc. of the U.S., was established. It became a wholly owned Sony subsidiary in 1988 and was renamed Sony Music. Entertainment Inc. in 1991. Sony acquired Columbia Pictures Entertainment, Inc. in 1989, later renamed Sony Pictures Entertainment Inc. They created Sony Computer Entertainment Inc. and Sony Communication Network Corporation in 1993 and 1995 respectively. In 2004, Sony Financial Holdings Inc. and Sony BMG Music Entertainment were established. Sony was part of a consortium that acquired Metro-Goldwyn Mayer (MGM) of the United States in 2005. Sony and Samsung entered a joint venture on manufacturing TFT LCD panels at S-LCD Corporation in 2006 and they entered another joint venture with Sharp in 2009 to sell these LCD panels. These major corporate movements have allowed Sony to become the major player they are today in the global technology sector. In their most recent corporate history Nobuyuki Idei stepped down as Sony Corp. Chairman and Group CEO and was replaced by Howard Stringer, marking the first time that a foreigner has run a major Japanese electronics firm. The last few years have been tough for Sony, as they have been losing money due mainly to increased fierce competition with Apple Inc. and Samsung Electronics Inc. to the tune of about $5 billion over the last three years. In May 2011, Sony expected to lose a total of $3.2 billion for the year due to the effects of the Japanese earthquake, forecasted downwards from their earlier projection of $857 million profit for the year. In September of 2000 Sony had a net worth of $100 billion but by December of 2011 it had plunged to $18 billion. Sony’s attempts at responding to these losses, through joint ventures and outsourcing, have yet to pay tangible dividends leaving the technology giant feeling unwary about their growth and sustainability moving forward. 2
BASIC MANAGEMENT
Corporate Governance
Sony is committed to strong corporate governance. As a part of this effort, in 2003, Sony adopted the “Company with Committees” corporate governance system under the Companies Act of Japan. In addition to complying with the requirements of applicable governance laws and regulations, Sony has introduced its own requirements to help improve the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management and advancing the proper functioning of the statutory committees. Under Sony’s system, the Board of Directors defines the respective areas for which each of the Corporate Executive Officers is responsible and delegates to them decision-making authority to manage the business, thereby promoting the prompt and efficient management of the Sony Group.
Governance Structure
Sony Corporation is governed by its Board of Directors, which is appointed by resolution at the shareholders’ meeting. The Board has three committees (the Nominating Committee, Audit Committee and Compensation Committee), consisting of Directors named by the Board of Directors. Corporate Executive Officers are appointed by resolution of the Board of Directors. In addition to these statutory bodies and positions, Sony has Corporate Executives who carry out business operations within designated areas.
Sony Initiatives
To strengthen its governance structure beyond legal requirements, Sony Corporation includes several provisions in its Charter of the Board of Directors to ensure the separation of the Board of Directors from the execution of business, and to advance the proper functioning of the statutory committees. The main provisions are as follows: o Separating the roles of the Board chairperson/vice chairperson and Representative Corporate Executive Officers. o Limiting the number of terms of outside Directors. o Setting forth qualifications for Directors for the purpose of eliminating conflicts of interest and ensuring independence. o Suggesting that, as a general rule, at least one Director of the Compensation Committee be a Corporate Executive Officer. o Prohibiting the appointment of the CEO or COO of the Sony Group (or persons in any equivalent position) to serve on the Compensation Committee. \
Risk Management System
Each Sony Group business unit, subsidiary or affiliated company, and corporate division is expected to review and assess business risks on a regular basis, and to detect, communicate, evaluate and respond to risk in their particular business areas. 3
In addition, Sony Corporation’s Corporate Executive Officers have the authority and responsibility to 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. The Corporate Executive Officer in charge of Compliance is tasked with promoting and managing the establishment and maintenance of such risk management systems through the coordinated activities of the Group Risk, Compliance, Internal Audit and other relevant groups.
Compliance
Ethical business conduct and compliance with applicable laws and regulations are fundamental aspects of Sony’s corporate culture. To this end, Sony has established a Global Compliance Network, adopted and implemented the Sony Group Code of Conduct, and set up global Compliance Hotlinesystems—all in order to reinforce the Company’s worldwide commitment to integrity and help assure resources are available for employees to raise concerns or seek guidance about legal and ethical matters.
Strengthening the Compliance System
In July 2001, Sony Corporation established the Compliance Division, charged with exercising overall control over compliance activities across the Sony Group, to emphasize the importance of business ethics and compliance with applicable laws, regulations and internal policies. The Compliance Division establishes compliance policies and structures for the Sony Group and performs crisis management functions. In July 2003, Sony established a regional compliance network comprised of offices in the Americas, Europe, Japan, East Asia and Pan-Asia (coverage area: Southeast Asia, Middle East, Africa and Oceania), which are charged with assisting the Compliance Division at Sony Corporation and exercising regional control over compliance activities to strengthen the compliance system throughout the Sony Group.
Sony Group Code of Conduct
In May 2003, Sony adopted the Sony Group Code of Conduct, which sets the basic internal standards to be observed by all directors, officers and employees of the Sony Group in order to emphasize and further strengthen corporate governance, business ethics and compliance systems throughout the Sony Group. This Code of Conduct sets out, in addition to legal and compliance standards, the Sony Group’s basic policies concerning ethical business practices and activities on such topics as respect for human rights, safety of products and services, environmental conservation and information disclosure. It has been adopted and implemented by each Sony Group company globally as its own internal code of conduct and is the subject of frequent “tone from the top” messaging and other training.
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Internal Hotline System
With the adoption of the Sony Group Code of Conduct, Sony also established the Sony Group Compliance Hotline system as a resource for employees to report concerns or seek guidance about possible violations of laws or internal policies, and to allow the Sony Group to respond swiftly to potential risks of such possible violations. The Sony Group Compliance Hotline system is available worldwide. Callers who report issues in good faith will be protected from any possibility of retaliation. The Sony Group Compliance Hotline system is directly linked to the Corporate Executive Officer in charge of Compliance and is operated independently from the ordinary line of command. Summaries of hotline calls, results of investigations, and updates on the operation of the system are reported to senior management and the Audit Committee. The framework for monitoring the compliance program consists of reports received through the internal hotline system, as well as those received from Regional Compliance Officers. Internal Audit and Compliance Audit programs supplement as warranted.
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HUMAN RESOURCES Sony endeavors to create a rewarding corporate climate that supports the efforts of a diverse range of employees. Since its establishment in 1946*, Sony has sought to remain at the forefront of technological development, building continuously on its achievements to create new lifestyles for people everywhere. Sony has also fostered groundbreaking new businesses, adopting an innovative approach to this challenge that exceeds national and regional boundaries. In these efforts, Sony recognizes its employees to be one of the most crucial aspects of its corporate foundation. Sony acknowledges that its ongoing ability to offer dream-inspiring products and services and exciting new lifestyles around the world depends on its ability to secure and foster talented employees with a wide range of values and personalities, irrespective of nationality, culture, race, gender, age, or the presence or absence of physical limitations.
Employee Data The addition of employees of its mobile communications business, included in the scope of consolidation effective from the fiscal year 2011, was offset by substantial personnel reductions at production sites in the East Asia and Asia/Pacific regions (i.e., excluding Japan) accompanying the implementation of production adjustments. As consequence, as of March 31, 2012, the Sony Group had approximately 162,700 employees on its books, down 5,500 from the previous .fiscal year-end Sony Corporation's headcount peaked at 23,000 in 1993, after which it remained fairly consistent at approximately 17,000. As of March 31, 2012, Sony Corporation's headcount was approximately 16,000. It is 146,300 in 2013.
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Composition of Sony Corporation's Directors and Corporate Executive Officers NonTotal
Female
Japanese Nationals
Directors
15
1
4
7 *3
1
2 *4
Corporate Executives
30
-
2
Sony Group Directors
17
-
7
Corporate Executive Officers
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Recruitment
Diversity in recruiting practices
As a company with sales, manufacturing and R&D bases in a number of different countries, Sony is promoting the localization of these operations by working to secure local human resources that best respond to national, regional and location-specific needs Additionally, with the aim of securing talented human resources crucial to growing its global business, Sony recruits university .graduates overseas to work in Japan Early in the 21st century, Sony expanded the scope of its efforts to recruit students to work in Japan, who were mainly from Europe and North America previously, and began to actively seek out promising university and post-graduate students in China and India. Recruiting in China began in earnest in 20001. As of April 2012, Sony had recruited a cumulative total of 264 university and postgraduate students in China. Recruitment from universities and graduate schools in India began in earnest in 2007. In both countries, recruitment efforts benefited from the cooperation of local Sony Group companies, which ensured that Sony secured top-level human resources. To encourage acclimatization, Sony provided new recruits with a variety of training, including Japanese language. Lessons, both before and after they began working in Japan
Sony has also established a Global Internship Program, which welcomes university students from Europe, North America the United States, China and India, among others. Sony is conducting recruiting presentations at universities, graduate schools and research facilities around the world, as .well as for groups of overseas students studying in Japan
Recruiting Practices
In its efforts to help change Japan's traditional approach to hiring new graduates, Sony has adopted new recruiting practices in the hope of attracting applications from individuals who identify with its CSR Top CSR Report Management Message Corporate Governance Compliance Quality and Services Responsible Sourcing Human Resources Employee Data Recruitment & Training .,corporate culture. To promote greater understanding of the Sony Group's various businesses products and services, 20 Group companies got together to stage joint recruiting fairs. In these .activities, Sony is striving to effect a change in the way job recruiting is done in Japan With the aim of encouraging young people in Japan to develop a more global perspective, in fiscal year 2011 Sony offered new domestic recruits the opportunity to polish their global skills by undertaking temporary assignments to Sony EMCS (Malaysia) Sdn. Bhd., the Sony Group's largest strategic production base. Interested individuals were encouraged to apply for the program through a campaign that invited them to "put their diplomas to work in the rain forest." On another front Sony offered internships to university students that focused on participation as support staff for its public viewing project in Tanzania. This initiative gave interns the chance to see Sony's commitment to social contribution in action. Participation in the public viewing project also enabled interns to experience firsthand both the challenges faced by many African countries and the dynamic potential. To promote greater understanding of the Sony Group's various businesses products and services, 20 Group companies got together to stage joint recruiting 8
fairs. In these .activities, Sony is striving to effect a change in the way job recruiting is done in Japan With the aim of encouraging young people in Japan to develop a more global perspective, in fiscal year 2011 Sony offered new domestic recruits the opportunity to polish their global skills by undertaking temporary assignments to Sony EMCS (Malaysia) Sdn. Bhd., the Sony Group's largest strategic production base.
Training & Development
The development and vitality of its employees drive Sony's dynamic growth. Sony recognizes its people as its most important management asset and the growth of its- people as a crucial aspect of its management foundation. Sony strives to further enhance motivation and encourage personal growth for its employees through on-the-job learning, as well as through access to a variety of programs designed to enhance individual abilities and skills and tailored to local needs.
Nurturing engineering talent
Despite the increasing openness of technologies, as well as the acceleration of cross-border and crossbusiness collaboration, Sony .continues to excel as a technological innovator Sony has traditionally promoted a variety of initiatives involving cooperation among its various R&D bases-as well as with other companies and/or R&D institutions-primarily in Japan, North America and Europe. However, in recent years Sony has also expanded its participation in cooperative initiatives in China and India. Engineers are responsible not only for adding depth to Sony's technological expertise, but also for generating ideas that integrate technologies from multiple specialized fields and for providing leadership for development teams that transcend national and corporate boundaries. In fiscal year 2010, Sony launched the Global Human Resources Development Program - a program designed to nurture the engineers that will spearhead Sony's advance into an increasingly globalized age, as well as to instill greater awareness of their role as core human resources-as part of Sony Corporation's R&D Platform. Under the program, young software engineers from Japan, China and India study and live together for three weeks, during which they also welcome visits from Indian IT vendors and participate in specialized software engineer development courses, enabling them to experience the momentum of the Indian market firsthand, as well as to learn about doing business in an emerging .economy In addition, approximately 230 Sony engineers with frontline expertise in key technological fields develop curricula and textbooks for use in Key Technology training courses, the aim of which is to enhance the expertise of engineers. The courses also offer the opportunity to learn a leading-edge technology from a specialist outside the Company. In fiscal year 2011, more than 16,000 employees took part in these .training course
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Enhancing management skills
Given the astonishing pace of change in the operating environment, Sony believes structure is essential to the training of employees, which provides the necessary support for employees with such diverse backgrounds. To this end, Sony is stepping up efforts to enhance the management skills by offering a variety of training programs targeting management-level employees around the .world For all management-level employees, Sony provides mandatory training programs that focus on effecting a change in each individual's perception of the responsibilities of management, as well as orientations by in-house instructors on management styles and position-specific training. Sony also trains experienced employees to serve as tutors, not only to provide support for new recruits, but also to engender early awareness of the importance of fostering new talent, thus creating a tutor .system that is charged with enhancing the skills of future management.
Support for career building
Sony respects the individual's desire to take on new challenges and has fostered the development of a corporate culture in which employees are inspired to seize the initiative in building their own careers. This approach, together with Sony's belief that structure is essential to the training of .employees, guides Sony's efforts to provide support for employee career development. Since 2007, Sony Corporation has designated October "Career Month," a period during which it works to create opportunities for employee growth. Over the course of this month, employees can meet directly with their supervisors to discuss training and development plans regarding their careers. The results are fed back to management and applied to efforts to reinforce Sony's programs for fostering human resources, thereby facilitating carefully tailored support for career building. As part of its broad system of support for career building, Sony distributes the Career Building Guide, a publication that outlines hints for furthering career-related discussions and contains information on training programs focused on personal growth. Sony has also appointed specially trained employees to serve as career advisors
Systems that support a healthy work–life balance
In Japan, Sony Corporation has introduced a flex-time system and a discretionary working system, enabling it to offer employees a variety of versatile options. Sony employees regularly use a high percentage of their allotted annual paid days off, which in fiscal year 2011 averaged 17 days.
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FINANCIAL STUDY Consolidated Financial Results for the for the Third Quarter Ended December 31, 2015. Tokyo, January 29, 2016 -- Sony Corporation today announced its consolidated financial results for the third quarter ended December 31, 2015 (October 1, 2015 to December 31, 2015).
Consolidated Results for the Third Quarter Ended December 31, 2015 Sales and operating revenue (“Sales”) increased 0.5% compared to the same quarter of the previous fiscal year (“year-on-year”) to 2,580.8 billion yen (21,507 million U.S. dollars). Sales were essentially flat year-on-year mainly due to increases in Game & Network Services (“G&NS”) segment sales, reflecting a significant increase in PlayStation®4 (“PS4”) software sales, and in Pictures segment sales, reflecting a significant increase in Motion Pictures sales, substantially offset by decreases in Mobile Communications (“MC”) segment sales, reflecting a significant decrease in smartphone unit sales, and in Devices segment sales, primarily reflecting a significant decrease in image sensor sales. On a constant currency basis, sales were essentially flat year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss).
Operating income increased 20.1 billion yen year-on-year to 202.1 billion yen (1,685 million U.S. dollars). This increase was primarily due to improvements in the results of All Other, the Pictures segment, the MC segment and the G&NS segment. The increase in consolidated operating income was partially offset by a significant deterioration in the operating results of the Devices segment, primarily due to deterioration in the operating results of the battery business, including the recording of a 30.6 billion yen (255 million U.S. dollars) impairment charge related to long-lived assets. In the same quarter of the previous fiscal year, an 11.2 billion yen write-down of PlayStation®Vita (“PS Vita”) and PlayStation®TV (“PS TV”) components in the G&NS segment was recorded. 12
During the current quarter, restructuring charges, net, decreased 3.0 billion yen year-on-year to 6.1 billion yen (51 million U.S. dollars).
Equity in net income of affiliated companies, recorded within operating income, was 1.8 billion yen (15 million U.S. dollars), compared to a loss of 0.1 billion yen in the same quarter of the previous fiscal year. This improvement was mainly due to an improvement of equity in net income (loss) for AEGON Sony Life Insurance Co., Ltd. in the Financial Services segment. The net effect of other income and expenses was an expense of 8.9 billion yen (74 million U.S. dollars), an improvement of 5.4 billion yen year-on-year mainly due to a decrease in foreign exchange loss, net. Income before income taxes increased 25.5 billion yen year-on-year to 193.3 billion yen (1,611 million U.S. dollars). Income taxes: During the current quarter, Sony recorded 55.7 billion yen (464 million U.S. dollars) of income tax expense, resulting in an effective tax rate of 28.8%. This effective tax rate was lower than the Japanese statutory tax rate primarily as a result of profits recorded in the insurance business, which is subject to lower tax rates, coupled with lower income tax expenses due to profits recorded at Sony Corporation and its national tax filing group in Japan, which currently have valuation allowances for deferred tax assets. In the same quarter of the previous fiscal year, Sony recorded 56.2 billion yen of income tax expense, resulting in an effective tax rate of 33.5%. Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 30.2 billion yen year-on-year to 120.1 billion yen (1,001 million U.S. dollar
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Condensed Financial Services Financial Statements The results of the Financial Services segment are included in Sony’s consolidated financial statements. The following schedules show unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services. These presentations are not in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Transactions between the Financial
Services segment and Sony without the Financial Services segment, including noncontrolling interests, are included in those respective presentations, then eliminated in the consolidated figures shown below.
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MARKETING STRATEGY Sony Corporation has not been doing well in recent years. This is indicated in the company financial performance where the company has recorded a loss for the second consecutive year. This poor performance is partly attributed to increased competition for Sony. In order to salvage this situation Sony has come up with a new marketing plan that we revive drive Sony’s revenues up and take the company back to profitability. Sony has always relied on traditional markets such as the United States and Europe. These markets have become highly saturated by similar and substitute goods which increase the cost of operation while driving down the margins. It is recognition of this that Sony has decided to venture into emerging markets and specifically the African market. The decision to move into the African market has been motivated by the recognition of the opportunity that this market presents due limited competition and improved market condition. The political, economic, social and legal environment in the continent has drastically changed and has now become conducive for foreign companies wanting to establish businesses. The threats present by this market are minimal as compared to the benefits. This plan has segmented the African market using geographical and Psychographic factors and selected the most appropriate market for targeting. Appropriate methods for positioning Sony’s product in the selected market segment have also been identified.
Situational Analysis
PESTEL Analysis 1. Political Environment Political environment does affect the performance of businesses. One element of this environment is the political structure (Luther, 2011). Though African has been associated with political instability in the past, most nations have very stable political environments that have supported by the appropriate structures (Fosu & Mlambo, 2001). Most African nations are also characterized by favorable laws and policies that are aimed at attracting investment, trade and technology transfer and this may work in favor of Sony. 2. Economic Environment Three economic elements are most important to Sony; exchange rates, inflation rate and rates of interests (Luther, 2011). Exchange rates are likely to affect the value of Sony’s sales. However, most African currencies have been recording a stable trend against major world currencies. Inflation and interest rates are likely to affect the purchasing power of the market. Most African society are subsistent and therefore are least affected by inflation. Interest rates are also likely to affect cost of financing operations (Fosu & Mlambo, 2001). Another relevant economic factor is employment rate. This is likely to affect the purchasing power of the consumers. Most African nations have been recording improvements in their economy along with employment situation (Fosu & Mlambo, 2001). The middle class is rising and this is a good prospect for Sony. 3. Social Environment Africa has for a long time been associated with low life expectancy, high death rates, poor health status, low literacy rates and poor standards of living. However, this picture is rapidly changing as the 20
African economy moves towards modernization (Fosu & Mlambo, 2001). Today, there better services in terms of education, health care, security, transport, communication and technology which has drastically changed the social status of majority of the African population.
4. Technological Envirinment Africa has lagged behind other regions in terms of technological progress. This has largely been attributed to lack of capital and the right expertise to drive the technological progress (Seres, 2008). However, this is not a challenge to Sony but should be viewed as an opportunity. The African societies are moving to upgrade their technology status and Sony, being a technology company, stands to benefit from this. Sony can play a significant role in providing technological services such communication, telecommunication and entertainments to African nations which would boost the company’s revenues. 5. Legal Environment Most African nations are in the transition stage from traditional economy to modern industrialized economy. Most of the countries are currently implementing laws and regulation that are meant to provide conducive environment for business as well as incentives for investors (Fosu & Mlambo, 2001). Sony stands to benefit from this legal environment and the only way to take advantage of this by getting there first. 6. Ecological Environment The ecological environment is very important to Africans because most of the societies are largely dependent on natural resources for their livelihoods (Fosu & Mlambo, 2001). As results there are tight environmental protections laws. However, this is not a problem for Sony as environmental protection is inline with the company’s codes of ethics.
Segmentation, Targeting and Position
Segmentation Segmentation is a marketing process that involves dividing up the market into different segments based on their characteristics, needs or behaviors (Epetimehin, 2011). Several approaches can be used in segmenting the market. In this marketing plan, the marketing committee proposed use of several approaches. These included demographic and psychographic segmentation. This refers to segmentation according to factors such as age, income, education and social status (Epetimehin, 2011). The African market can be very distinct in terms of these characteristics and certain groupings would favor Sony’s products than others. Another proposed approach is geographical segmentation. The committees proposed that the company should consider regions, country and cities that will provide the most opportunities and lesser risks for the company (Epetimehin, 2011). Behavioral segmentation approach was also proposed. This approach will particularly focus on characteristics such as willingness and Readiness to buy and usage of products. Targeting Targeting is a marketing process that entails selection of a market segment or market segments that best suits the objectives of the organizations (Epetimehin, 2011). This process comes immediately after segmentation. After the market has been divided into segment, the company 21
proceeds to select the most appropriate segment. In terms of geographical segment this plan proposes selection of politically stable regions and countries to set up distribution centers. These are such as South Africa for the Southern African market, Nigeria for the Western African market, Egypt for the Northern African market and Kenya for the East African Market. In terms of demographic and psychographic segments, the plan proposes the selection of the middle class segment which is characterized by demographic traits such as high disposable income, well educated, younger age and technology competence. This segment is also the most favorable in terms of willingness to buy and usage of Sony products. This is because of the already mentioned demographic characteristics. Positioning Positioning is a marketing process that entails creating identity or mental image of the company brand/ products among the selected market segment (Mustafa, 2009). The company intends to create an image of brand that provides products that are affordable to the market and which satisfy the needs to the consumer. This would be achieved through the company’s differentiation and marketing strategy. The African market is not so much advanced in terms of purchasing power and technology competency. The company needs to respond to this need by providing products that are affordable and at the same time meaningful to the consumers. The company’s consumer electronics line will be better suited for this market. The communication and telecommunication production line will also suit the institution clients such as government agencies and corporations. Objectives Financial Objectives 1.To Increase the volume of sales from $88.64 billion in 2011 to $120 in the next five years (Sony, 2011). 2.To Increase the company profitability from a loss of 2.96 billion in 2011 to a profit of $3 billion in the next five years 3.To reduce business costs by 20% in the next five years Marketing Objectives 1.To increase the market share in the Global consumer electronic industry from 15% to 25% in the next five years (Sony, 2011). 2.To become the leading company in the distribution of consumer electronics and other technology in the African market in the next five years. Societal Objectives 1.To boost the technology transfer rate in Africa by 5% in the next five years 2.To ensure growth of investment in community project from 0.5% in the first years to 5% in the firth year. Marketing Strategies In order to achieve the objectives the market must first become aware that the company’s product exists in the market (Kanagal, 2006). Thus, the first strategy will involve informing the market about the company product. This will mainly be achieved through sending information to the marketing concerning the availability of Sony’s products. Once the market has learnt about the product, the next step involves encouraging the customers to purchase the company product. Knowledge of the products by the company will simply not help the company in achieving the objectives and this is why this knowledge has to be turned into purchases (Kanagal, 2006). The 22
second strategy is therefore stimulating purchases of company product by the potential customers. This strategy involves providing consumer with information concerning the product features and how these products can satisfy their needs (Kanagal, 2006). It will also be achieved by ensuring that the products are close enough to the consumer and this requires an enhanced distribution channel. The third strategy involves ensuring that initial customer come back to the company for repeat purchases (Kanagal, 2006). In simple terms, this strategy involves promoting customer loyalty. The strategy can be achieved through enhancing the customer experiences with the company goods thus provision of quality products. It may also be achieved by enhancing the customer experiences with the company, through developing friendly customer services. Creating the perception of value is also important in promoting loyalty. This can be achieved through offering fair prices and augmented services such as installation of new Sony equipment and repair of broken equipments. The fourth strategy is turning the loyal consumer into an advocate of the company (Kanagal, 2006). By enhancing the customer experiences through the above strategies, the company can promote word of mouth marketing from existing consumers.
Marketing Programs
The marketing programs develop in this plan are based on the 4Ps. Four Ps stand for product, price, place, promotion and People. Product Product refers to the goods or services offered to the market by the company (Kerin & Reagan, 2011). The plan proposes that the company should tailor the company products to suit the market. Thus the plan proposes the focus on product that respond to needs of African markets such as computers, Television, communication devices, music systems and other consumer goods. The products should also be easy to use and in the right package. Price As already mentioned the purchasing power in the African market is not at par with that of Sony’s traditional market (Kerin & Reagan, 2011). Therefore the company needs to bring prices down by lowering the cost of production and distribution. The plan also proposes use of prices adjustment programs such as discounts, coupons and rewards in order to promote initial sales. Place This element is concerned with the accessibility and availability of the products to the consumers (Kerin & Reagan, 2011). This can be achieved by forming efficient distribution channels. This plan proposes establishment of indirect distribution channels. The company should form partnership with small distributors in various cities and town who would sell and offer auxiliary services to customers on behalf of Sony. The company will also establish relationship with large retail chains which will help distribute company’s products. Promotion Promotion refers to the direct sales activities and programs. The plan proposes various activities. Top on the list is advertising through television, radio and print media as well as social media such 23
Facebook and Twitter. Other promotional activities include special events, displays and exhibitions and publicity events.
Financial Plans Sales Projections The company anticipates growing the volume of sales from $80 billion in 2011 to $120 billion at end of 2016 financial year by moving to the African market (Sony, 2011). This will mainly be achieved by growth in the consumer electronic product lines. However, other product lines are such as communication and technology equipment are also expected to make some contributions. Expenditure Projection The company expects the overall cost of business to go up due to the plan to move into the new market. This plan will involve additional expenses inform of distribution cost, advertising and general marketing cost and taxation cost among others. However, the company expects to reduce the marginal cost of getting its product to the market by the end of the 2016 financial years by taking advantage of the cheap labor, cheaper cost of living and incentives provided by African governments. Profits Projections The company anticipates growing its profit from a loss of 2.3 billion in 2011 to a profit of $3 billion at the end of the 2016 financial year. This growth will be achieved through the projected growth in sales and the projected reduction in marginal cost of production and selling. Metrics and Implementation Control Distribution is a very essential part of this marketing plan (Valos & Vocino, 2006). This is because the proposed plan involves covering a large geographical market and there very efficient channel of distribution is required. This implies that channel metrics of measuring performance are essential. At the same time, the success of the marketing plan is also dependent with the successful implementation of the other strategies that have been implemented (Valos & Vocino, 2006). This implies that the strategy metrics of measuring performance is also essential. As result, this plan proposes integration between channel metrics and strategy metrics in measuring the implementation of this plan.
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SWOT ANALYSIS Strengths:
Weaknesses:
Mature Value Chain Good Brand Name Intellectual Properties Holdings
Weak Financials Lack of Focus Conservative Management
Opportunities:
Threats:
New CEO Economic Recovery Industry Integration
Competition Macroeconomic Factors Partnerships
STRENGTHS:
Sony has established a mature supplier management system.20
They select suppliers that comply with laws, maintain solid financials, innovate technologically, protect the environment, offer competitive prices and control component qualities.
They emphasize on the frequent exchange of information with suppliers via E-commerce throughout the standardized procurement process.
The company has established a broad sales network, registered in approximately 200 countries and territories.21
Sony provides good after-sales service.
Almost all of Sony’s consumer-use products carry a warranty.
The company maintains support contracts with customers in addition to warranties. They also maintain customer information centers in their principal markets.
Sony has a strong brand name. Their products are generally considered to have high quality and good design. Sony has a number of Japanese and foreign patents, and is licensed to use a number of patents owned by others. Sony considers their overall license position beneficial to their operations.
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WEAKNESSES:
Sony operates numerous product lines that serve too many parts of the entertainment value chain. They serve as a content provider, content aggregator, broadcaster, hardware producer, and manufacturer of “value-added products”iii. The “empire-building” strategy not only caused the company’s innovation and operation to slow down, but also impaired their competitiveness in any of the market segments they are engaged in. Further, the product lines have few connections among themselves, and therefore do not generate many network externalities or cost advantages.
The current financial results are weak, showing high liquidity risks, decreasing sales, slowly recovering profitability, low operating efficiency, underperforming stocks, and low investor confidence.
The current management team has been relatively conservative. While restructuring has frequently been implemented, it was usually done on a small scale. Strategically significant mergers and acquisitions were seldom conducted.
As Sony expanded into more segments and geographic locations, they became more sensitive to exchange rates and interest rates that are exogenous factors out of Sony’s control.
OPPORTUNITIES
Kazuo Hirai, appointed CEO of Sony in February 2012, might bring changes to the company. His expertise in computer entertainment and PlayStation might bring more focus to the firm’s product lines. Since Sony’s operating results are very sensitive to economic and employment conditions, the business is likely to benefit from a recovery from the recent economic crisis.
Sony’s stock price is possibly undervalued after its decline by more than 50% in 2011, which might attract more equity investments in the firm in the near future. iv
The significant competition from Apple and Google could result in more integration within the electronics and software industry. Sony may take this opportunity to acquire more aggressively in order to drive down their manufacturing and intellectual property costs.
THREATS:
The Great East Japan Earthquake and its aftermath may continue to adversely affect Sony’s operating results and financial condition by25:
incurring excessive restoration costs that exceed their insurance policies.
causing energy supply shortages that may lead to a reduction or suspension of production.
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product quality degradation caused by using replacement components
reducing overall demand by consumers and businesses.
Sony must overcome increasingly intense competition from firms that may be more specialized or have greater resources.
Foreign exchange rate fluctuations can affect financial results because a large portion of Sony’s sales and assets (more than 75%) are denominated in currencies other than the Yen.v
Sony’s business restructuring and transformation efforts are costly and may not attain their objectives. Increased reliance on external business partners may increase the possibility that:
Sony may incorporate defective or inferior third party components or software.
Third party components may be subject to copyright or patent infringement claims.
Sony’s operations may be affected if the external partners are subject to business or service interruption caused by accidents or bankruptcies.
When raw materials, parts and components become scarce, the cost of production rises.
STRATEGIC RECOMMENDATIONS Based on our analysis, the most significant challenges for Sony are competition and macro-risks, including currency, disaster, and economic downturn. In this section, we propose four strategic recommendations for Sony. The first two aim to develop Sony’s competitive advantage. The third recommendation tries to maintain Sony’s reputation and control lawsuit damages. The last recommendation targets at the macro-risks mentioned above.
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BOSTON MATRIX We can use BCG matrix tools to know about company's growth and market shares .This tools can help the company to allocate resources and use analytical tools in branding and marketing
Star: Star product indicates that large cash is generated in business and leading the business with huge profit with powerful market shares and the growth rate is very much high. We can say that when Sony launch its first camera with face detection technology SONY captures 40% market share and that time there was no close competitors of the SONY. So it helps to increase the marketing towards the customer with new technology .
Cash Cows: This products indicates that profits and market shares are high but the growth is very low .When Sony launch Ericsson w980 phone that time the growth of market was very low and this phone generates more cash and compare to another mobile companies in that time, this phone positioned Sony as a market leader in the world of music because it provides 8gb memory card so the person can store more than 5000 music.
Dogs: It shows that the product becomes a Dog in market because of its low growth and that time market shares are also low. The straight example of PS3 was beaten by one of the giant company Microsoft xbox . And the company had a loss of 3 billion at that time .That time media asked company's CEO Mr. Howard Stringer that if it could make back the loss they made . He responded saying "Not for as long I live". This affected on SONY branding image and on their gaming market .And Micrsoft took the advantage of gaming market they launch new games with their new strategy .
Problem Child: It indicates the worst cash characteristics of all. Because the demands of the product is very high but the market shares are very low so the returns of the product is very much low. Here I can present the good example of SONY BRAVIA because when the product launched SONY expectation was very high behind this product but due to tough competition in marketing area this product couldn't make such sales. And the market share is only 14% where Samsung lead the market with 25%.
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Recommendation:
Take advantage of rural areas focusing on product price instead of product features.
To compete with their competitors in the market, take support from third party for ex if they want to increase sales of their PS3 compare with Microsoft xbox 360 they need third party support like Metal Gear solid.
Systems are changing very rapidly so it’s very difficult for the company to upgrade a system with new updates with their software. So as per my view SONY has to focus on all their software which are using in their different products they have to upgrade their software according to market needs. Focus on young generation demand invest their capital in their Research and development department to fulfill their needs .so the advantage of this they attract young people with their requirement of products .
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Conclusion SONY is continuously working to improve in their overall speed and flexibility in the market. They are continuing their research on new innovative products and are highly dedicated in their electronics leadership. They are taking maximum advantages of growing market and their consistent profitability in their hardware business make them market leader in the electronics market.
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