[pic] Applied Strategic Management HONOURS DEGREE OF BACHELOR OF SCIENCE BUSINESS AND MANAGEMENT STUDIES Table of Contents Acknowledgement………………………………………………………………………. 3 Executive Summary……………………………………………………………………. 4 Project Outline…………………………………………………………………………… 5 Industry Life Cycle………………………………………………………………………. 7 Key Success Factors (Industry Matrix)………………………………………………. 9 Industry Analysis (Porter’s Five Forces)……………………………………………. 11 SWOT Analysis • Internal Factor Analysis Summary (IFAS)………………………………………14 • External Factor Analysis Summary (EFAS)……………………………………. 16 Strategic Factor Analysis Summary (SFAS)……………………………………….. 8 TOWS Matrix…………………………………………………………………………… 20 Assessment of Company Performance…………………………………………….. 22 Review of Strategic Options and Future Strategic Direction……………………… 23 Recommendations for Implementation of Strategies………………………………24 The Usefulness of Strategic Management Models………………………………… 25 List of References…………………………………………………………………….. 27 Total Word Count: (3855) Acknowledgement I would like to thank Mr. G V Nathan for guiding me with this assignment all the while. He has been supervising and advising me on how to improve on my assignment throughout every lesson.
If I were to do this assignment alone without his help, I will not be able to do it well and finish it on time. Therefore, I would like to sincerely thank him for being patience with me and help me with this piece of work along the way. Executive Summary The main purpose of this assignment is to analyze how the electronic industry works. As technology keeps getting better and better in our modern days, all electronic manufacturers should also come out with more innovative products as the technology grows. This will allow the electronic companies from all around the world to gain competitive advantage.
The corporation which I had chosen to analyze is Sony, one of the leading and most successful electronic manufacturers in the world. Sony Corporation has grown a lot since it was first established in 1946 in Japan. This assignment is about how this Sony and other managed to do so well in the industry and grow since it first started. It contents the management of Sony Corporation. It also has the various types of models which tell us which stage the electronic industry is in whether its in the introduction, growth, maturity or decline stage.
It also indicates what are the factors needed for the company to be successful and competitive. The analysis of the strengths, weaknesses, opportunities and threats of Sony are also stated. The usefulness of all the different types of models are also written in this assignment. In this assignment, I have also developed some strategic options for Sony so that it can gain competitive advantage over its competitors and increase its revenue after using these strategic options. I have also written down some strategies which Sony can use to prepare and do well in the future.
Therefore, this assignment contains a lot of useful strategic options and planning which Sony or other companies in the industry can use to gain competitive advantages and be successful in the future. (277 words) University of Bradford / MDIS Applied Strategic Management Project Outline Name: Low Jun Tuan Victor Student Number: 08029202 Batch Number: BBMD2 0829A Selected Company: Sony Corporation Brief of Company Sony is one of the leading manufacturers of electronic devices such as video game consoles, computers, cameras and a lot of other electronic products to the consumers.
Sony Corporation has grown a lot since it was first established and has become a leader in the electronic market. Reasons for selecting Sony Corporation The reason why I choose Sony Corporation is because it is a successful and innovative company. Sony is also good at marketing themselves and is able to satisfy the needs and wants of most of their consumers. Main strategic issues facing the company • Sony Corporation has to keep improving on their products or produce new products to compete with its competitor. As Sony Corporation is the manufacturer of a lot of electronic devices and products such as computers and cameras, they have to ensure that all of their products are able to meet the satisfaction of their consumers. Company’s contribution to the National Economy Sony Corporation of America, based in New York is a US subsidiary of Sony Corporation, headquartered in Tokyo. Sony’s principal U. S. businesses include Sony Electronics Inc, Sony Pictures Entertainment Inc, Sony Computer Entertainment America Inc, and Sony Music Entertainment. Sony recorded consolidated annual sales of approximately $78. billion for the fiscal year ended March 31, 2009, and it employs 171,300 people worldwide. Company’s contribution to the regional economy • In 2008, Sony was awarded Director-General of the Agency for Natural Resources and Energy Prize of the FY 2008 (13th) New Energy Award. • In 2009, Sony Corporation, Sendai Technology Centre and Sony Semi-conductor Kyushu Corporation, Kokubu Technology Centre awarded Director-General of the Agency for Natural Resources and Energy Award. • Sony reduces 100000 tons of CO2 emissions through the use of renewable energy.
Sony also agrees to support the South Africa Mobile Library Project for 3 years. On 4th of December 2009, Sony joins the team ‘Using power of football for sustainable development’. Recent strategic choice In the year 2009, Sony Corporation had a joint venture with another electronic manufacturer, Sharp Corporation. The joint venture of these two electronics manufacturers consists of 92. 96% from Sharp Corporation and 7. 04% from Sony Corporation. In addition, Sony will inject capital to Sharp Display Products Corporation (SDP), which will result in a maximum of 34% ownership by Sony of SDP by the year 2011.
Source of information on company http://www. sony. net www. sony. com (363 words) Industry Life cycle Sony Corporation is in the maturity stage in the industry life cycle. This is because Sony has been in this industry since it was first founded in 1946 in Japan and has been one of the most successful and leading electronic manufacturers of electronic products over all these years. In the year 2009, Sony is ranked 81 in the global company and its revenue is 76945 millions. The profit made by the company is 985 million.
At the end of year 2008, Sony’s consolidated sales and revenue was 7730000 million (7730 trillion) yen, which is equal to 7888 billion when converted into US dollars. There are a lot of electronics manufacturers around the world and Sony has been well known to the people and as they have many branches in a lot of country all around the world. It also has joint ventures with other companies like Ericsson, Qimonda AG and NXP Semiconductors and many others. As a semiconductor producer, Sony is among the top 20 semiconductor sales leader. Through all these joint ventures, Sony Corporation was able to make more profit and revenue.
Although there are many different companies which manufactures electronic devices, most of them are not a threat to Sony because of its good financial positioning and well known reputation. As information technology keeps improving in the modern world nowadays, Sony is still able to keep up with the technology. That is one reason why it can live up to its company current slogan, which is make. believe. With the company’s improving technology and constantly producing products with high qualities standard, Sony Corporation was able to maintain its reputation for being one of the most leading and successful electronic manufacturer.
Compare to other electronic manufacturers, Sony is considered one of the more successful one and most company do not pose a threat to Sony. Key Success Factor |Key Success Factors |Weight | Sony Corporation |Panasonic Corporation |Universal Electronics Inc. | | | |A lot of capital required | |High switching cost | |Product differentiation | |Price sensitivity | |Can be replace by substitutes | |Low switching cost | Product differentiation | |Competitive pricing | |Low switching cost | |Product differentiation | |Strong competition | |Brand loyalty | |Not much substitutes | |Unique product or service | |High switching cost | |Buying industry has low barrier of entry | Rivalry Among Existing Firms (Low) The competitions between Sony and other electronics manufacturers are low.
Although the number of competitors are high in every countries, very few can match up against Sony. But the pricing of the products must be competitive in order to do well in the industry. If the product is not priced competitively, there will be fewer buyers to buy that product. The products which they are producing are also about the same, therefore there is no product differentiation. But as most people prefer to buy products with better branding, so Sony stands a better chance against its competitors. Threat of New Entrants (Low)
As a lot of capital is required for other new entrants to start an electronic manufacturing industry, the threat of new entrants is low. It is also difficult for customers to switch the products which they bought from a company they are familiar with to a new entrant which they have not heard of before. Therefore, even if the new entrant managed to produce the same product, there will not be many buyers. So newcomers need to come out with innovative product which customers had not experienced before. If not it will be difficult for the newcomer to do well and earn profits in the industry.
Bargaining Power of Buyers (High) Some of the buyers can be quite demanding when they are purchasing products. For example, they might ask for lower price for the product or ask for some free gifts. If the company did not accommodate to their requests, they will buy from different companies which will give them more advantages. As most of the electronic products produced by different companies are about the same price the switching cost for buyers can be quite low. Electronic manufacturers also produce products which are all about the same, therefore there is not much product differentiation.
Threat of Substitute Products or Services (High) For almost every industry, there are always other products which can be used to substitute the existing products. The same for electronic industry, which have not much product differentiation, it can be substitute if the same products are pricing at a lower price. Therefore the switching cost is low. And because the competition for electronic industry is high, it can easily be substitute by other companies producing the same products. So, in order to do well in this industry, the company must have a very strong branding so there it will not be substitute easily.
Bargaining Power of Suppliers (High) The bargaining power of the suppliers in the electronic industry is very hard as all the parts needed to manufacture all the electronic products are all highly technological. And because there is not much substitute, suppliers can increase the price of its materials to its buyers. After having long term relationship with the suppliers, they might charge their products at a lower price to the buyers. Therefore, the switching cost in the electronic industry can also be high if the buyer decided to change their long term supplier to a new supplier.
Relative Power to Other Stakeholders (High) As the governments are controlling the materials which Sony will be using to manufactures its product, the relative power can be quite high. The governments need to check whether the raw materials are safe to be use before they can be use. Union is also another factor which affects the company. The unions act as a welfare for the employees in the corporation. Any conflicts or unhappiness between employers and employees go to them to settle the conflicts interests of the employees. Internal Factors |Weight |Rating | | | | | |Opportunities (O) |SO Strategies |WO Strategies | |O1 Joint ventures |Joint venture using its strong financial |Manufactures new products so that there will be | |O2 Manufactures new products |positioning |product differentiation | |O3 Advertise on new products |Opening more branches in other countries since it |Joint ventures with companies to earn profits to| |O4 Open branches in other |has good global positioning |cover loss of unprofitable businesses | |countries | | | |O5 Product innovation | | | | | | | |Threats (T) |ST Strategies |WT Strategies | |T1 Strong competitions |Manufactures innovative products which other |Creates new innovative products to compete | |T2 Competitive pricing |companies cannot imitate |against competitors | |T3 Economic recession |Global positioning gain rust of customers to buy |Advertise more on its product to gain customer’s| |T4 Smaller electronics companies |products of better quality |attention so they will not buy from other | |producing similar products | |companies | |T5 Customers buying from | | | |smaller companies | | | SO Strategies
Given Sony’s strong financial positioning, it can buy over other smaller electronic companies, or have joint ventures with them. This will allow Sony to increase its profit income. And since Sony is already well known to so many people in many different countries in worldwide and have a good global positioning, it can also use its strong financial positioning to open up more branches in other countries which do not have the corporation to gain more reputation and trust of the customers. This might help Sony to gain more reputation and can get even better in the global positioning. WO Strategies Since Sony is an innovative company, it can manufacture more innovative products so that there will be product differentiation between Sony and its competitors.
For example, Sony is the first company to start to produce the blu-ray disc recorder, which many company still did not have that product. This allows Sony to gain competitive advantage over its competitors. And because Sony has been doing some unprofitable businesses, it can have joint venture with other companies to earn more profit in order to make up for the loss of those unprofitable businesses. ST Strategies As there have been a lot of strong competitions in the industry, Sony can use its technology innovation to produce new products which other companies cannot imitate. There have also been many smaller electronics companies which sell the same products but sold them at cheaper price. Therefore, Sony an advertise and promote its product since it has a good global position which can gain the trust and attention of the customers. This will also increase the chances of customers buying the products from Sony instead of those smaller electronic companies. WT Strategies As most people always go for new and innovative products, and due to the strong competitive business in the modern days, Sony should create more innovative products instead of shifting away from it in order to compete against its competitors. By doing this, there will also be product differentiation between Sony and its competitors. Sony should also try to advertise more on its products to gain the attention of the customers.
This will also increase the chances of customers buying products from Sony. Assessment of Performance of Company Efficiency Using its strong financial positioning, Sony has been fully utilizing its capital in many different areas. One of it is by having many branches in many countries in the worldwide. This allows the corporation to expand globally and earn a reputation for itself in most of the countries. By earning a reputation for itself, Sony has also gain the trust of its customers around the world. Sony has also uses its capital to form joint ventures with many other companies to maximize its revenue and profit. Effectiveness Sony has always been able to keep up with the technology innovation.
That is one of the reasons why Sony never loses out to its competitors. It is one of the reasons why it is listed as one of the leading and successful manufacturer of electronic products. It is also the first company to manufacture the blu-ray, which is the currently the newest disc recorder. Sony has also form joint ventures with other companies like Ericsson and many other companies to increase its profit income. Return to investors At the end of March 2009, Sony’s sales and operating revenue has decreased by 12% compared to the previous year. The losses were recorded due to the factors such as slowdown of global economy, the appreciation of the yen and the decline of the Japanese stock market.
Therefore, due to the decrease of Sony’s sales and operating revenue, and because of the recent economic recession in the world, Sony has not been making doing well compared to last time. But it should be able to do well again after the economic recession. Review of Strategic Options and Future Strategic Direction Strategic Options Since Sony is known for being innovative, it can make use of its innovative to produce new products to compete against its competitors. It has always been able to catch up with the technology innovation. And given the strong financial positioning, Sony can also form joint ventures with other well known electronic companies to gain better reputation for itself and the company which Sony joint venture with.
By doing this, Sony will be able to maximize the use of its capital to increase its revenue. As there is not much product differentiation in the electronic industry, Sony can also manufactures more new innovative products so that it can gain more competitive advantage. As the technology innovation is improving, most of the customers will purchase the new products instead of the old one to keep up with the modern technology. After producing every new product, Sony can advertise and promote on the new product to gain attention of its potential buyers. Sony can also make use of its strong branding to gain the trusts of its customers. Future Strategic Direction In the future, the technology innovation might be better than it is now.
Therefore, Sony needs to plan early for their next innovative products so that they will always be the first electronic manufacturers to manufactures new innovative products using its innovative and strong financial positioning. With new products which are more advanced and had not been in the market, Sony can price the product at a price slightly higher than the previous product to earn more revenue. This might help Sony to gain better reputation and will also be able to gain more trust from the people around the world. Recommendation for Implementation of Strategies Structure Sony can use management structure to expand its strengths such as global electronics, entertainment and technology. This allows Sony to manage well in all the areas and also in its management.
Sony also can have an effective reallocation of the resources and promotions of cross-border within the corporation. This structure will have a positive effect on the corporation as it can provides a better focus for operating its businesses around the world. Systems As Sony is an electronic corporation, it needs to rely a lot on technology systems. Using technology system, it has produced a lot of electrical products all around the world and makes Sony one of the most successful and leading electronic manufacturers. Sony was also the first corporation to manufacture the blu-ray technology, which is currently one of the newest technologies around. Sony can also have a reward system in its corporation.
By having a reward system, employees will be motivated by the reward. Therefore, the employees will work even harder in the company in order to get the reward. Policies Although Sony may be a successful and leading electronic manufacturer in the world, it has weak points. One of it is that there are not much Sony service centre. This makes it inconvenient of its customers if there are any problems with the products. Therefore, Sony should build more of its service centre around so that it will make it easier for customers to assess. This will make customers think that Sony is a reliable corporation which puts its customers in the first in line.
And given Sony strong financial positioning, it can fully utilize its capital by setting up more service centre in all parts of the world. (3094 words) The Usefulness of Strategic Management Models Industry Life Cycle The use of this model is to help us to find out the whether the industry is at the introduction, growth, maturity or decline stage. As different stages in the life cycle require different strategies, we need to help us find out whether the industry is in which stage of the life cycle. The industry life cycle can also allow us to know the industry is in which stage in the future, and with that, we will be able to know which strategic methods to apply to improve on the industry. Key Success Factors
The use of this model is to identify what are the key factors that will help the company to earn more revenue and be more successful in the future. After we have done identifying all the key factors, we need rate those factors and give each factor a weightage so that we will be able to know what are those factors that we need to pay more attention to and improve on it. By improving on all of those factors, the company will be able to gain more competitive advantage against its competitors. Porter’s Five Forces This model is useful as can identifies the factors that will affect the company. It can also identifies which area and how competitive it is so that we can take precaution.
It can also help us to fully utilize the company’s resources well as this model allows us to study on the industry before choosing the right strategic move. SWOT Analysis (IFAS and EFAS) This model allows us to know what are the internal factors, which are the strengths are weaknesses of the company, and the external factors, which are the opportunities and threats outside the organization. It is important to know what are the strengths and weaknesses of the company so that we will be able to make full use of our strengths and improve on our weaknesses. We will also be able to make use of the opportunities to earn more revenue for the company and also be ready to deal with the threats which will cause negative effects to the organization.
Strategic Factor Analysis Summary In this model, we choose those factors which are more important from the SWOT analysis to identify whether these factors are in the short, intermediate or long term. By knowing the duration of those factors, we will be able to fully utilize the resources accordingly, without those resources going to a waste. If we do not know the duration of these factors, we will not be able to utilize the resources properly. TOWS Matrix The use of this model is mostly on strategic planning using SWOT analysis. It helps us to turn all the bad points into good points by allowing us to know how we can use our strengths to take advantage of opportunities.
It can also let us know how we can use strengths to avoid threats, opportunities to overcome weaknesses and minimize weaknesses and avoid the threats facing the company. (484 words) List of References • Lynch Richard, (2006) Corporate Strategy, 4th Edition, Pearson Education Limited. England • Wheelan Thomas L & Hunger David, (2003), Strategic Management and Business Policy, 8th Edition, Addison Wesley Publishing Co, U. S. A ———————– Time Industry Sales/ Output Introduction Growth Decline Maturity Buyers Potential Entrants Suppliers Other Stakeholders Industry Competitors Rivalry Among Existing Firms • Number of competitors • Competitive pricing • Product differentiation • Branding Substitutes