The document outlines key concepts related to Sony's production and operations, including: - An introduction of Sony and its products like laptops, mobile phones, and the Sony Vaio laptop. - Factors of production for Sony like land, labor, machinery, and capital. It also discusses how fluctuations in factor prices and supply impact production. - Determinants of demand for Sony's products and how changes in factors like price, income, and tastes affect demand. - Price elasticity of demand and supply. Income and advertisement elasticities are also discussed. - Sony Vaio operates under monopolistic competition. Production functions and opportunity costs are presented.

3. FLOW OF PRESENTATION
 Introduction of sony
 Products of sony
 Introduction of sony vaio
 Factors of production
 Impact on production by change in factors
 Determinants of Demand
 Affect on demand by change in determinants
 Price elasticity of demand
 Price elasticity of supply

4.  Income elasticity of demand
 Advertisement elasticity of demand
 cross elasticity of demand
 Market structure
 Opportunity cost
 Government policy
 Foreign trade policy
 Import duty
 Impact by government policy
 Impact on technological change
 Impact of Recession
 How is differentiation done?

5. Introduction of Sony
 Sony company founded in the year 1945.
 It’s Headquarter in Tokyo, Japan.
 Producer of Electronic and IT products
 In 2004, 72nd rank in forbs ranks of largest
company in the world
 Sony company is a co-developer of CD, DVD,
and super audio CD.
 Sony music entertainment is a second largest
company in the world.

6. Products of Sony
 laptop
 Mobile phones
 Television & Projectors
 Digital Camera & interchangeable lens Camera
 Video Camera
 Tablets & Notebook
 Portable audio
 Play station 1 and 2

7. Introduction of Sony Vaio
 Sony Vaio launched in 2004-05.
 Available in i3, i5 and i7 processor in 2nd and 3rd
both generation
 Available in the price range of Rs. 24000 to
200000
 Recently Sony launched ultra-book.

8. Factors of production
 Land : in north America,
Fifty seven manufacturing sites.
Four engineering locations.
Headquarter is in Japan.
 Labor : More than 168200 workers (like engineers)
are working in many departments of the
company.
Cont.

9.  Machinery :
Require high latest digital technology.
 Human resource :
Intelligent train workers
IT Experts
 Capital

10. Impact on production by
price of factor fluctuates
 If the Prices of the factors is increase cost of
the product is increase and selling price is
also going to increase
There is a increasing in price so
demand is going to decrease.
For Ex., Increase in wages of labor
New machinery purchase
Cont.

11.  If the Prices of the factors is decrease cost of
the product is decrease and selling price is
also going to decrease
There is a decreasing in price so
demand is going to increase.
For Ex., Increase in wages of labor

12. Impact on production by
supply of factor fluctuates
 If there is a shortage of any factor on that time the
production will decrease. So shortage of the product
in market arises. So that the supplier of the product
take the benefit of that by increase the price of
product.
For Ex.,
spare part of computer or labor’s
shortage decrease the production.

13. Determinants of demand
 Market price
 Income of Consumer
 Number of Consumer
 Prices of related goods
 Tastes of Consumer
 Expectations
 Technology
 Complimentary goods

14. Affect the demand by
changes in determinants
 Market Prices : If price of ultra book
increase in market then the demand will
decrease.
 Income of Consumer : if Income of
consumer is increase then he spend more,
and so the demand of Product will increase.
Cont.

15.  Number of Consumer : if number of
consumer is increase demand will increase.
 Price of related goods : if related good is
available in market at low price then
consumer shifted for buying that product
and decrease the demand of our product.
Cont.

16.  Taste of consumer : if taste of consumer
change they stop buying the product and
shifted to other product, and demand will
decrease.
 Expectation of Consumer : if the product is
not up to the expectation of consumer they
will not buy the product. and demand will
decrease.
Cont.

17.  Technology : If technology will change and
consumers are not satisfied with our products
technology on that time demand of our product
will decrease.
 Complimentary goods : A complimentary good is
a good with cross elasticity of demand. If
software price will increase demand of the
hardware will decrease.

18. Price elasticity of Demand
 Price of Sony Vaio ultra-book laptop is
Rs.90,000.
 We estimate that the demand of that laptop was
5000 units in India.
 If the Price of the laptop is increase by Rs.5000
so the consumers preference was not changed
equally.
Cont.

19.  In our estimate the demand of the laptop at
95000 is 4950 units.
 Price Elasticity Demand=
(Q2-Q1)/[(Q2+Q1)/2]/ (P2-P1)/[(P2+P1)/2]
=0.01/0.054
=0.185
 So in that case the demand is inelastic because
it is less than 1.
Cont.

20.  But if the Price was reached at Rs.120,000 so
that most of the customers switch in other
brand so that in our estimate the demand was
2500 units.
 So that in this case the Demand is Elastic
because it is more than 1
Cont.

21. Price 90000 95000 100000 105000 110000 120000
Deman
d
(Units)
5000 4950 4800 4165 3200 2500
0
20000
40000
60000
80000
100000
120000
140000
0 2000 4000 6000
Price
Demand
Demand Curve

22. Price Elasticity of Supply
Cont.
 Supply of Sony Vaio Ultra-book laptop is
price elastic.
 At the price of Rs.90000 the supply of ultra-
book laptop estimated was 5500 units.
 If the price of the laptop is goes to Rs.
60000 so that the estimated supply of laptop
was 3300 units.

23.  This happens because the price of the laptop
was decreased by some external factors
so, that the profit margin was decreased.
 So that the supplier of the product give less
attention in this type of non-marginal
product. And also survive in market is
necessary for all the industry so that they
shift their resources of production to the new
type of high demanded laptop and earn the
maximum profit.
Cont.

24. Price 90000 80000 70000 60000
Supply
(In Units)
5500 5000 4200 3300Price
Supply
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
0 1000 2000 3000 4000 5000 6000
Supply Curve

25. Income Elasticity of Demand
 In our estimation if the income of the consumer is
increases
 so that this will be minor effect on the demand of
the product.
 The Demand of the ultrabook was 5000 units at
the price of Rs.90000
 If the income of the Consumer was increased to
Rs.80000 Cont.

26.  from 65000 so this will Increase the demand
to the 5200 units.
There is a minor effect on the
demand because in our estimation if the
income increases so the which consumer
prefer low quality laptop were shift to the
sony vaio laptop. But which consumers are
with the sony vaio will go in next good
brand and new model of laptop. Because for
that customers sony vaio is in inferior
goods. So that ultimately there will be minor
effect on the demand of the ultra-book.
Cont.

27. Income 65000 80000
Demand 5000 5200
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
4900 5000 5100 5200 5300
Income Elasticity of Demand
Price
Demand

28. Advertisement
Elasticity of demand
Advertisement elasticity of demand means
change in demand related with the change
in advertisement.
Advertisement elasticity of demand =
% change in demand
% change in advertisement
Cont.

29.  In Sony Vaio, Kareena Kapoor is the
brand ambassador.
 They are spend Rs.90 Crore for
marketing of sony vaio.
 In our estimate the 30 to 40% demand
are because of the advertisement.

30. Cont.
Cross Elasticity of Demand
 Cross elasticity of Demand means change in
demand of one product related with the change
in the price of the other substitute goods.
 For Sony Vaio ultra-book the apple mac-book is
substitute goods.
 The price of Apple mac-book pro is Rs.105000,
and the price of ultra-book is Rs.90000.
Cont.

31.  So in that case if the price of the apple product
goes down to Rs.85000 so the most of customer
so Ultra-book switch to the apple product. And so
that ultimately the demand of the ultra-book will
decline.
 For example suppose the quantity demanded was
goes to 3500 from 5000 units because the price
of the apple mac-book was goes to 85000 from
105000
Cont.

32. Price
Demand
Price of Apple Mac-book
( in Rs.)
Demand of Sony Ultra-book
( in Units)
105000 5000
85000 3500
0
20000
40000
60000
80000
100000
120000
0 1000 2000 3000 4000 5000 6000
Cross Elasticity of Demand Curve

33. Market Structure
of
Sony Vaio In our estimate the Sony Vaio laptop cover the
Monopolistic Competition Market.
Monopolistic competition market
their are many seller of the goods.
Each sellers products are different
from the other sellers product.
Each seller may set price for their
own product.
Cont.

34.  In our estimate in the laptop market there are
many seller of the laptop.
 Sony vaio’s laptop was different from the other
brands laptop.
 The price of the laptop was set by the sony vaio.
 So that in our estimate the sony vaio laptop come
under the market of monopolistic competition.

35. Production Function of
Sony Vaio
 Production function is related with the labor for
the production and unit produced by the firm.
 Through production function curve we will find
the per worker production and also easily find
the productivity of new appointed worker.
Cont.

36.  In Sony Vaio, production in unit and labour are
increasing.
 The labor in sony In sony vaio, production in unit
and labour are increasing. Sony Vaio at
2010, 2011, 2012 was nearly
161000, 162800, and 168200.
 The production of sony vaio at 2010, 2011, 2012
was nearly 355000, 510000, 700000 units.
Cont.

37. Year Labour Production (in
unit)
2010 161000 355000
2011 162800 510000
2012 168200 700000
160000
161000
162000
163000
164000
165000
166000
167000
168000
169000
0 200000 400000 600000 800000
Production Function Curve
1
Labour
Production
2
3
1- 2010 year
2- 2011 year
3- 2012 year

38. Opportunity Cost of
Sony Vaio
 Opportunity cost means the cost which sacrifices by
the firm for producing other goods.
 For example, sony vaio produces the laptop but if he
produces other product from the same investment so
also earn the profit. So for the sony vaio the profit
earned by other ways was opportunity cost because
he sacrifices this type of all profit for production of
laptop.
Cont.

39.  Sony vaio was invest $80 billion for production of
laptop.
 If sony vaio invest this money to other product
like car, medicine, etc. so also earn huge profit. So
this profit was opportunity cost for sony vaio.
Cont.

40. For example,
Sony vaio invest $80 billion in other following business:
Industry Pharma In. Automobile In. Laptop In.
Profit (in $
billion)
$ 170 Million $ 180 Million $ 200 Million
From this table for sony vaio the opportunity
cost was $ 180 million .

41. Government Policy
 Excise duty: complete exemption for local manufactures
from excise duty. Imported computers subject to
additional customs duty (levied in lieu of excise duty)
equivalent to 7 per cent.
VAT: computers have a concessional rate of 4 per cent
(importance attached to the IT sector in India).
 Laptops are covered under Information Technology
Agreement-1(ITA-1) and have enjoyed exemption
from basic customs duty on import

42. Foreign Trade Policy
 Export of electronic goods to be incentivized
under Focus Product Scheme.
 Expeditious clearance of approvals required from
DGFT shall be ensured.
 Exporters /Associations would be entitled to utilize
MAI & MDA Schemes for promoting Electronics
and IT Hardware Manufacturing Industries exports.
 Electronics Sector included for benefits under
SHIS scheme.

43. Import duty
 Current Import duty is 14.7% on laptops in India.
 So if there is a change in import duty in India it
will affect on price of sony vaio and also in
demand.
For ex. For current Import rate the demand is
500000 units If the Import duty rate Increase and
being 20% then the price of laptop will
increase and so the demand will decrease
and shift at 450000 Units.

44. Impact by
Government Policy
 If the government policy is change so ultimately
this affect the sony vaio’s
production, demand, supply and price also.
 If the tax rate will increase so the cost prise and
also ultimately the selling price would be increase.
And so that the demand of the laptop was decrease.
But supply of laptop was increases.

45.  And if the tax rate will decreases so cost
price and selling price will decrease and also
demand was increases.
 If the foreign policy will change also effect
the demand and supply of laptop.

46. Impact of technological
change
 In the market if there is a change in technology
so it will affect on demand of the current
technology.
 The people will demand new technology so if the
company will not change their product according
to the technological change so it will affect that
product. And company may suffered from loss.

47.  It’s a necessary for all the companies to change
their products according to the technological
change.
For Ex.
Sony vaio is launched their product which is
called ultra-book duo 11. Sony’s new product
include three different product in one –
ultra-book, notebook, and tabulate.
It’s a totally new technology for market.

48.  There is a two different type of affect on market
by launching this product.
1. its affect on competitors market. Vaio have a
new technological product and other competitor
companies have not this type of product. Their
demand is decrease.
if they are going to launch new
product which have better technology on that
time our demand will decrease.

49. 2. Vaio have launched the new product which is
more technological. It affects also on vaio’s other
product.
After launching this product there is a
decreasing in other products price and demand.
Sony vaio model E14A’s price was decrease and
demand is also going to decrease.
Before launch of ultra-book E14A’s price
was 56000 and after launch its price will decrease
and being 49000

50. Impact of Recession
 Recession was impact whole the market of sony vaio
laptop.
In the market, if their was a recession so that the
unemployment was increase.
 So that ultimately the labor wage rate was decrease
according to the demand and supply rules. In the
market the Demand of the laptop was decrease because
of the shortage of money, so that the production was
also decrease, so that the labor demand was decrease.

51.  So in this way the demand of the labor was
decrease and the supply of the labor was
Increase, so that the exploitation of labor was
done by the producer. This will affect the
lifestyle of people. And this affect the
development of nation.
 So that the production cost of laptop was
decrease, so the producer was interested in
producing more number of laptop. So the supply
of the laptop was increase but the demand was
the laptop in the market was decrease.

52.  Because of that the surplus of the laptop of sony vaio
was made in the market.
 This will decrease the cash flow of the sony vaio.
Because of the surplus their major part of
investment was blocked in the market.
 Because of that they will face the financial crises
and can’t perform better.
 To come out from this situation the sony vaio
was necessary to reduce the prices of laptop
(decrease profit margin) to get money from the
market.

53. How is differentiation
done?
 Sony vaio’s look is very different from other
and also very attractive. So it is being attraction
for all generation.
For Ex.
Sony vaio launched it’s product which is
called ultra-book. It is a high price product
which is a combination of laptop, notebook and
tabulate. It helps the company for attract the
high society and corporate people.

54.  Ultra-book is a touch screen laptop which is
totally different from other laptops.
 Sony vaio is available in so many colors
which is not provide by any other laptop
company.
For Ex. :
Vaio’s E-Series laptop have so many
colors which help the company for attract the
young generation.

55.  Sony Vaio have a all type of product for all
customer. Like high range, low range, light
waight, etc..
For ex.
Its lowest range product’s price is
24000 and highest product‘s price is
200000.

56. Threats from mobile phones
and tabulate
 Now days the mobile phones and tabulates are
cover most of the features of laptops.
 So which person who can not afford laptop and
have little use of laptop he/she will buy mobile
phones and tabulates instead of laptop.
 So because of increasing in usage of mobile
phone and tabulates it decrease the demand of
laptop.