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Sony mobile communication business strategy
- 2. ISSUES IN THE CASE •Stiff Competition from rivals like Samsung and Apple •Lack of strategic planning leading to lower market share •Lack of financial planning leading to looses •Product planning and diversification looks another issue for this case www.hndassignments.co.uk
- 3. CONTENTS •Introduction to Sony Mobile Communication •Role of Mission, Vision, Goals and Core competencies •Factors effecting SMC(Sony Mobile Communication’s) strategic planning •Techniques to be used by SMC for formulation of strategies •Organizational Audit-SWOT •Environmental Audit-Porter’s 5 forces, PESTLE analysis •Role of stakeholders in strategy formulation process •Recommended strategies for SMC •Conclusion www.hndassignments.co.uk
- 4. INTRODUCTION SONY MOBILE COMMUNICATION •Formally known as Sonny Ericsson and was founded on 1st October,2001 •Subsidiary of Sony Corporation, which is one of the best companies in the world to provide personal, home and other electronics gadget, •Headquartered at Tokyo, Japan, Sweden and Lund •It is the fourth largest mobile seller in the world in terms of volumes shipped per year •In 2012, Sony Ericsson was renamed as Sony Mobile Communication with Sony buying Ericsson’s stake in the venture •Sells across 100+ countries worldwide with 7500 employees worldwide working for it www.hndassignments.co.uk www.hndassignments.co.uk
- 5. MISSION, VISION, GOALS AND OBJECTIVES OF SMC MISSION “To experience the joy of advancing and applying technology for the benefit of the public.” Vision “To create exiting new digital entertainment experiences for consumer by bringing together cutting – edge product with latest generation content and services.” www.hndassignments.co.uk www.hndassignments.co.uk
- 6. MISSION, VISION, GOALS AND OBJECTIVES OF SMC Objectives •To increase stress on emerging markets like India, China etc by increasing presence and having a rise in sale of 20% by 2015 •Use promotional campaigns and have a global reach and thus not limiting them to UK/USA etc •Create innovation and come up with newer and better devices for usage with target of professionals etc www.hndassignments.co.uk www.hndassignments.co.uk
- 7. MISSION, VISION, GOALS AND OBJECTIVES OF SMC Core Competencies •Research and development •Team Work •Customer Services •Value Employee and customer relationships www.hndassignments.co.uk www.hndassignments.co.uk
- 8. HOW DOES MISSION AND VISION CONTRIBUTE TO STRATEGIES PLANNING •They provide a framework on which plan are formed, •They give the areas for which plans are to be formed, •Give a direction to the organization and its resources which are important for planning effectively, •How to adapt to the planned changes are also given by these statements www.hndassignments.co.uk www.hndassignments.co.uk
- 9. FACTORS EFFECTING SMC’S STRATEGIC PLANNING •Innovation •Communication •Culture and Organizational Structure •Level of Engagement www.hndassignments.co.uk www.hndassignments.co.uk
- 10. TECHNIQUES FOR STRATEGIC PLANNING FOR SMC •Brainstorming •Expert opinions •Plan made in organization by the heads •Parenting Technique www.hndassignments.co.uk www.hndassignments.co.uk
- 11. EFFECTIVENESS OF TECHNIQUES •Applicability in the current business environment •Employee engagement level •Level of change initiated www.hndassignments.co.uk
- 12. Threats: Competitors competition Global economic recession Strength’s: Innovation Quality Brand strength Product differentiation Weakness: International expansion Product pricing Opportunities: “Asset Light” strategy Network initiative Organizational Audit-SWOT www.hndassignments.co.uk
- 13. ENVIRONMENTAL AUDIT- PORTER’S 5 FORCES MODEL FOR SMC www.hndassignments.co.uk
- 14. RELEVANCE OF PORTER’S MODEL ON SMC •Threats of new Entry is very Low •Bargaining Power of Buyer is very High •Bargaining Power of Supplier is Low •Threat of Substitute Products is Low •Intensity of Rivalry is the Highest www.hndassignments.co.uk
- 15. ENVIRONMENTAL AUDIT- PESTLE •Political Factors •Economical Factors •Social Factors •Technological Factors •Legal Factors •Environmental Factors www.hndassignments.co.uk
- 16. ROLE OF STAKEHOLDERS IN STRATEGY FORMULATION Stakeholders for SMC www.hndassignments.co.uk
- 17. ROLE OF STAKEHOLDERS •Role of Owners •Role of Employees •Role of Customers •Role of Society •Role of Government www.hndassignments.co.uk
- 18. RECOMMENDED STRATEGIES FOR SMC •Focus on right segments •Refine Quality •Improve corporate governance •Use competitive pricing and promotional strategies •Hedging international finical and other risks www.hndassignments.co.uk
- 19. CONCLUSION •Sony Mobile Communication is a organization driven by innovation •Plans regarding more market share capturing should be initiated •Corporate governance should be given more importance •Pricing and promotional strategies must be given more importance •Learn from the parent organization and walk on there path •Finally, focus on the right segment to reap the right result www.hndassignments.co.uk
Editor's Notes
- Sony Mobile Corporation was formally known as Sony Ericsson, which was founded in 2001 on 1st October with a joint venture between Sony corporation and Ericsson. This was a subsidiary of the Sony group which is one the world’s top organization when it comes to supplying home care, personal etc electronics like mobiles, T.V’s etc. The organization headquartered at many places as the research and development work takes place at multiple places namely, Tokyo, Japan etc. The company Sony Ericsson was renamed as Sony Mobile Communication(SMC) on 16th feb,212 with Sony buying Ericsson’s stake in the venture. The mobile seller has been also ranked as the fourth largest organization to sell mobiles in terms of shipping. Today SMC sells its mobiles in more than 100 countries and has an employee base of around 7500 employees.
- Mission Statement The mission statement of Sony Mobile Communication(SMC) is “To experience the joy of advancing and applying technology for the benefit of the public.” The mission stamen if analyzed further following findings is made:- SMC wants to give its customer’s a joy in using there technologies and products SMC want to b an innovation oriented organization Vision statement Vision statement of SMC is ““To create exiting new digital entertainment experiences for consumer by bringing together cutting – edge product with latest generation content and services.” The vision statement if analyzed gives a clear indication that in long run and future to come SMC will always be leading organization to provide best in class technologies and innovation to its customer to keep them ahead in life.
- Objectives of SMC With the major mobile makers like Samsung and Apple whose major sales comes from Emerging markets of India, China etc, thus Sony also wants to cater to these markets by 2015 Also the reach of promotional strategies should be made global as Sony is a global organization with operations in more than 10 countries worldwide thus promotional campaigns etc must have a global reach so that every customer can connect to a single campaign and thus expenditure can also be reduced to plan newer campaigns, Innovation and targeting professionals is another objective SMC.
- Core Competencies Research and Development:- With SMC having its research and development team in many countries namely Tokyo, Lund, Sweden etc thus the extent or research work taking place in Sony is impeccable making it one of there core competencies, Team Work:- The work culture followed at SMC is similar to Sony corporation and which is the Japan culture where team is given more importance and where team work is more effective than in other cases, Customer Service:- Customer servicing is another core competency at SMC as innovative and effective product planning, customer support centers both online and offline make it a core competency, Valuing employee and the customer relationships is anther core competency at SMC and these two relationships are well death and managed by the organization at the same time.
- The statements like Mission, Vision, Goals and Objectives of an organization are very essential for an organization plan strategically and to implement the plans formed, for an organization like SMC which is more bound for growth in terms of market share, and improving financial health etc, these statements are of great importance because of the following reasons:- Framework of Planning:- These statements gives the framework on which plans are to be formed, these frameworks can be existing plans and policies, organization structure etc. Ares which need to be strategically planned:- These stamens like mission, vies etc gives and indicate the areas where the problem actually exists for example in case of Sony Mobile Communication which has to undergo a loss of Yen 97.2m in 2013 when the sales although became just double of 212 figures, thus areas where the problem exists can be found from these statements. Direction to organization and movement of the resources:- In case of planning the mobilization of resources is very essential this mobilization of resources can only be made with the help of these organizational statements as each and every resource in the organization follows these statements carefully and closely. Adaptation to change:- At last these statements also help the organization and its resources to adapt to any change which is a result of the strategically planning.
- SMC is an organization which gives more importance to the level of innovation, employee and customer relationships and thus it can be called as customer centric organization as more benefits are planned for them and importance is given to them before designed products as well. Thus the factors the effect the strategic planning at SMC are:- Innovation, as SMC gives more importance to research and development and innovation also both of them being there core competencies and as the nature of the mobile industry is such that customer’s want to try and test newer technologies, thus innovation is the first key factor that will effect the strategic planning at SMC. Communication:- Level of communication between SMC and its employees and SMC and its customer is yet another important factor that will effect the strategic planning at SMC as employees and customers are the two important pillars for SMC. Culture and Structure:- Working culture and structure at SMC which is team oriented and flat with matrix structure respectively will be another important factor for planning. Level of engagement:- As employees and other organizational resources are the ones who will be effected from the organization planning and changes thus the level of engagement they have while preparing plans are another important factor.
- SMC can use the following techniques of planning:- Brainstorming:- Brainstorming is a techniques where in employees, exerts etc can be mea to sit together and Areas of planning can be brought in front of them one by one and there thoughts over the issue can be recorded and thus the organization could know what the employees want and best ideas can be taken further, Expert Opinion:- Expert opinion is similar to brainstorming however the only difference is in expert opinion the experts like industry heads etc give there views on the issues and problem areas and these views are then taken forward in the organization with out the involvement of employees etc. Plans made by the heads:- Sometimes the head of department or say the management may come up with plans for he organization as a whole, thus this can be another technique for strategic planning. Parenting Technique:- In relevant to SMC and its culture Parenting technique suits the best as in this technique the organization parents and natures its employees though out strategy implementation and helps them overcome the changes arising due to strategy implementation.
- The techniques of strategy implementation can be judged on the basis of effectiveness on the following grounds namely:- How effective and applicable are the techniques used in the current business scenario for example:- say plans are to be made on internal structure thus management court take the best decisions rather than the experts, thus techniques will depend on situations and business scenarios, Resource engagement level is yet another parameter on which effectiveness can be judged as it is the resources who will have to implement the strategies in the best possible way and as close as they have been planned, thus resource engagement level is very essential, Lastly, level of change i.e. how big is the level of change and how much impact will it have over the resources will also be a parameter to define the effectiveness of the technique of strategic planning.
- SWOT analysis is carried to have an organizational audit of Sony Mobile Communication. The basis pointers are:- Strength’s: Innovation- Product innovation, services innovation through well defined research and development team. Quality- Increased emphasis of customer usage given rise to the quality aspect. Brand strength:- With Sony corporation name joined with Sony Mobile Communication, thus the brand image and all the attributes of Sony indirectly comes in contact with SMC as well. Product differentiation:- Differentiation in looks etc for its products like X1, Experian series etc. Weakness: International expansion:- International expansion has been a consistent and regular weakness of SMC as issues like global designing and global needs have a source of concern for SMC. Product pricing: -SMC has always just price skimming as its technique thus it always charges higher than its rival which is another weakness. Opportunities: “Asset Light” strategy:- Use of asset light strategy can be an opportunity for SMC, asset light strategy is a strategy to outsource production so that the cost of production could come down, Network initiative:- SMC can use a well developed and extensive network of Sony corporation to build a market for itself. Threats: Competitors competition:-High competition in the industry with huge players like Samsung, apple etc already dominating the market this can be a threat to SMC Global economic recession:- Also global economic downturn can be another threat for SMC and thus selling its products can be a challenge for the organization. Product pricing Corporate Governance
- Porters five forces Analysis of sonny Mobile Communication Threats of new Entry (Low): Electronic industry needs huge amount of capitals. High scale economy and constant innovation is another barrier to a new entrant. Moreover, the government policy acts as entry barrier for a new company. Bargaining Power of Buyer (High): For Sony Mobile Communication product the bargaining power of buyer is very high as there is almost no switching cost from one brand to another. And the information technology provides the customers with wide range of alternatives. Bargaining Power of Supplier (Low): SMC has a global band of suppliers giving the suppliers no upper hand (bargaining power) over SMC. Moreover suppliers are comparatively small entity than SMC so suppliers have weak bargaining power. SMC usually negotiates directly with its supplier to obtain high quality product in low price. Threat of Substitute Products (Low): SMC’s varied range of products has no substitute or a very few that seems to be obsolete or have on foot out of the door. Thus the possibility threat of substitutes is moderately low. Considering that SMC has built a good reputation and strong customer loyalty, it effectively positions the company’s products against product substitute to some extent; this is a surplus for the company. [Appendix] Intensity of Rivalry (High): Industry rivalry is high due to relatively intense competition and high exit cost. It is also largely due to the numerous and equally balanced competitors in the markets, generally short product life cycle as well as high R&D, fixed and storage costs. The growth is slow and thus the intensity of competition. SMC’s high rivalry is causing them to lose profitability though the suppliers give them advantage over cost. There is no threat from substitute but still buyer find alternative as they have bargaining power. And the high entry and exit barrier gives them high risky returns.
- PESTLE Analysis Political Due to the deregulating markets, like other mobile phone companies; SMC is has the authority to be independent in every country it operates. Economical The increasing young population and the increase in the amount of disposable money demands a lot of choices to the people. People demand more features at a reasonable rate. Though SMC has a lot of unique features its price which is high when compared to other phones makes it economical. Moreover, it instability issue further acts as huge back draw. Social SMC brings about a change in the peoples social life by offering the most attractive and innovative handsets in the industry. It stands by its mission to offer communication with entertainment. SMC has all these features but these features could not make it to the peoples heart due to the stability issues. Technological Advancement in the field of technology by other mobile phone companies leaves behind SMC. The advancements include touch screen, high resolution cameras etc., Legal SMC is unique in its design offering the sense motion technology. But people choose over to other phones due its bad reviews Environment All products of SMC have a global declaration. It tales initiative to offer solutions which enable people to recycle the products in an environmentally friendly way.
- Stakeholders for SMC can be of two types, on the basis of whether they exist in the purview of the organization or whether they are outside the purview:- Internal Stakeholders:- Stakeholders who have interest in SMC as they age internal to the organizational structure of it, like managers, employees etc. External Stakeholders:- Stakeholders who have an interest in the organization even if they are not in the purview of the organization like investors, shareholders, creditors etc.
- Role of Owners They must provide the resources that are required for the business to operate efficiently. These include the employment of workers, identifying suitable premise and procuring machinery, equipment and raw materials. They must make timely decisions to ensure that the business remains profitable. They must motivate employees to perform well. Role of Employees Employees must work efficiently to accomplish tasks assigned. Accomplishing tasks may require teamwork and therefore employees must have good interpersonal skills. Employees must adhere to the rules and relations of the company. Role of Customers They assist businesses in indentifying the goods and services to be produced based on their demands. They also help business to identify changing trends in the market and so prepare business operators for future demands. Role of Society The production process may cause air pollution and discharge of harmful waste into rivers and seas. The society keeps businesses in check by making them aware of their impact on society. They write letters to the company and the media and speak on talk shows. Role of Government Regulate business activities to protect consumers. Government agencies ensure product standards as well as that various legislations are adhered to ensure the protection of consumers’ rights.
- Recommended Strategies:- Focus on right segments and markets:- As the markets which are emerging like India etc which have huge potential must be catered to largely like the other counter parts like Samsung and apple does successfully, thus targeting the right segment would benefit SMC s it would reduce unnecessary promotion for segments which are not the target audience. Quality:- As SMC has efficient and effective R&D team however still work on product designing and quality has to be done as the problems with the handsets in Sony is far more than other counterparts, Improved Corporate Governance:- Sony as an organization has been facing corporate governance issues like password leakage leading to looses of huge amount of money for the customers etc, thus Sony should have a well developed and well designed corporate governance as that activates like them are not repeated and can be controlled in future, Us Competitive pricing and promotional strategies:- Pricing strategies and promotional strategies should have a global look and also it should depend on the industry and market sentiments, thus competitive pricing is the right strategy to be used as only then SMC could gain more market and acceptability with the customers, Hedging:- Also we have seen SMC has faced a huge loss in 2013 which is Yen 97.2 m, the basic reason is the currency fluctuation and losses arising from it and Laos other reasons, however SMC should use effective hedging techniques to be effective in future.
- Sony Mobile Communication or SMC is an organization that is driven by innovation, quality, customer serve etc, such an organization will need to use effective planning and efficient use of resources so as to grow and keep up to the pace of the demands in the industry. Plans which are to be prepared and initiated by SMC should focus on market growth, also use of pricing and promotional strategies may come in handy here so as to gain more market with increased customer preference for SMC. SMC should learn from the rich experience of Sony corporation which has seen all ups and down and work towards a better and committed future. Also financial statement must be well initiated and managed at length and use of hedging must be promoted.