Sony Corporation in Australia - Paper Sample

IntroductionThe Sony Corporation is one of the leading technological companies in new product development and sales. As articulated by Gershon (2013), Sonys introduction of its Walkman and other related broadcasting products have played a significant role in defining an entire technological generation in the field of consumer electronics. The Sony Corporation is one of the multinational companies that were found to have made little progress in optimizing their business operations from a global perspective (Koudal & Engel 2007). As outlined by Chang (2011), Sonys global expansion strategies were obscured by stiff competition from its arch-rivals Samsung, who had a higher market capitalization than Sony in the year 2000. The challenges and difficult times encountered by the Sony Corporation have contributed to its development of different business and operational strategies that aim at expanding/introducing its brands to new markets segments worldwide. This report will focus on presenting Sonys strategies for entering the Australian consumer electronic market through the analysis of the companys opportunities, strengths, weaknesses, and threats; in relation to the Australian external environment.

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Background Information on the Sony Corporation

The Sony Corporation was originally a Japanese Company that was established by Akio Morita (founder) and Masaru Ibuka (co-founder) between 1945 and 1946 (Gershon 2013). Sonys first entry into the foreign market was because of its innovative U-matic video tape recorder (VTR). The first foreign market breakthrough happened in the 1970s when a large percentage of United States broadcasters including the CBS network used VTRs as part of their electronic newsgathering initiatives. As discussed by Gershon (2011), it was after the United States broadcasters experimented and gave feedback on Sonys U-matic VTR that the Sony Corporation designed the U-matic BV series of electronic newsgathering equipment, consisting of the BVU 100, the BVE-500 auto electronic editing unit, 200 video cassette tape recorder, and the BVP 100 color camera, (p. 157). The equipment became an immediate success in the United States foreign market. In 1981, Sony made another breakthrough by designing the Betacam half-inch broadcast camcorder that combined both the recorder and the camera into one unit. The two major historical breakthroughs aligned the Sony Corporation with the broadcast equipment. Today, the Sony Corporation has diversified its product designs from hardware, electronic brands to software brands like video game software, Television shows/movies, and music.

As outlined in the Sonys official company website, its mission is to fulfill its consumers curiosity by creating new technological experiences: Our unlimited passion for technology, content and services, and relentless pursuit of innovation, drives us to deliver ground-breaking new excitement and entertainment in ways that only Sony can, (Sony.net 2016). The Sony Companys vision is to unite all its stakeholders worldwide through a common aspiration, ideals, and beliefs. Also, the Sony Corporation aims at realizing a zero environmental footprint by the year 2020 through its business sustainability programs like the Green Management 2020, (Sony.net 2016).

Organization Structure, Economic and Business Strategy

The Sony business operations are divided into various business units including Electronic business unit, Sony Computer Entertainment, Sony Music Entertainment, Sony Picture Entertainment, Sony Life Insurance Co. Ltd., and other business units. As explained in the Companys press release (2016), Sony has been engaging in the sequential division of its business units across the Sony Group with the aim of reinforcing its competitiveness in individual business while ensuring responsibility and accountability. The splitting out process is part of Sonys organization structure realignment strategies.

The Sony Group business segments/units are headed by appointed Corporate Executive Officers. The CEOs are appointed by Sonys Board of Directors, who are at the top of the organization structure hierarchy. In the Sony Group business units (headed by appointed CEOs), the executives responsible for reinforcing their allocated business assignments under the oversight of the respective Corporate Executive Officers are known as Business Executives. Notably, at the headquarter level, the Business Executives are called the Corporate Executives of Sony Corporation. Before the Companys Board of Directors at the top of the organization Structure, there are two Representative Corporate Executive Officers: President/ Chief Executive Officer and the Executive Deputy President / Chief Financial Officer. The current Sony Corporations president and his deputy are Mr. Kazuo Hirai and Kenichiro Yoshida respectively.

Profit Generation and Investment for growth

During the first three years after Hirai became Sonys president in the year 2012, the company concentrated primarily on restructuring. According to Hirai, the process was painful process, but we were able to see these measures through to their completion (Sony cooperation 2016). In the Fiscal year ending March 31, 2016, the Company introduced the second phase mid-range corporate plan, which was formulated with the aim of profit generation and investment for growth (Sony cooperation 2016). With the second phase corporate strategy/plan, Sony shifted away from its previous emphasis on organization restructuring and focused on growth (Sony Corporation 20162).

As depicted in the graph (Appendices 1), the consolidated results for Sonys operating income in the 2015 financial year was reported to be higher than the 2014 operating income by a margin of +225.6 billion Yen (Sony Corporation 20162). The second table in the appendix section shows part of a detailed financial income statement for Sony from 2012 to 2016. Despite the devastating Kumamoto earthquake disaster at the beginning of the 2016 financial year, which affected Sonys business operations in a negative way, the companys consolidated operating profit is forecasted to be 300 billion Yen. The continuous profitability despite various environmental challenges is attributed to Sonys "profit generation and investment for growth" strategy (Sony Corporation 20162). As reported in the companys annual financial report, Sony is aiming at realizing a steady progress towards reaching its return on investment target of more than 10 percent and its operating profit target of above 500 billion Yen, come the 2017 financial year (Sony Corporation 20162).

Background Information on the Business Environment in Australia

Economic Environment

Australia is one of the best-performing economies with the highest per capita income levels in the world (Cavusgil et al. 2014).As outlined by the World Bank economic report (2016), Australia is categorized among high-income countries with an approximated population of 23.8 million people, as per the 2015 population statistics. The country had a Gross Domestic Product (GDP) of USD 1.34 Trillion and a life expectancy of 82.25 years, as per the 2015 and 2014 demography respectively (World Bank 2016). As reported by the International Monetary Fund (2016), Australias GDP growth rate as at 2016 stands at 2.9 percent. The World Bank projections indicate that Australias GDP growth rate is expected to rise steadily in the future financial years. The third table in the appendix section provides an overview of Australia GDP in comparison to other countries.

Legal/Political Environment

The Australian government has a significant influence on the countrys economic progress. The government is capable of controlling economic crisis situations like the 2007 economic recession that affected European countries, through the implementation of strategies that aid small businesses (Dunning 2012). The Australian government emphasizes on responsible monetary and fiscal infrastructure, with a focus on productivity and innovation. The countrys robust economic and political stability over the recent years have spurred rapid economic growth (Cavusgil et al. 2014). Moreover, Australias close economic and political ties with emerging markets like China and other Asian countries has encouraged foreign direct investment in the country. As discussed by Cavusgil et al. (2014), Australia is among the civilized countries with a well-developed legal system that encourages free trade and foreign direct investment market forces.

Socio-Cultural Environment

The Australian government is based on values of the rule of law, freedom of association/speech, and religious tolerance. The country has a compilation of indigenous and foreign cultures that have interacted to form common socio-cultural practices. For example, Cavusgil et al. claim that the Australian cultures can be described as monochromic orientation, where the Australians focus on time, schedules, and punctuality as resources (2014). As illustrated in a research study, Leonard demonstrates how the indigenous Australians are ecological conscious; they use traditional ecological knowledge to adapt and manage environmental changes (2013). The values created by the Australian government, the level of education and cultural diversity, as well as the norms perpetrated by its people, form a serene socio-cultural environment for foreign direct investments (Cleveland, Papadopoulos, & Laroche 2011).

Ecological and Technological Environment

As outlined by Keast (2013), Australia is characterized by moderate climatic conditions that favor both agricultural and manufacturing business activities. However, as reported by an Australian government website on natural disasters, Australia faces a wide range of natural disasters including bushfires, severe storms, landslides, earthquakes, drought, heatwaves, floods, and cyclones, which affect the countrys orientation in different perspectives (Australia.gov 2015).

As explained by Dunning (2012), technological factors in any business environment entail technological aspects such as technology incentives, the rate of technological change, automation, and research and development activities. Such factors can determine minimum efficient production levels, influence outsourcing decisions, or form barriers to foreign direct investments. The Australian government dedicates grants to R & D in every financial year to aid businesses to commercialize and develop their information protocols. Some of the grants associated with technological development in Australia include R & D Tax Incentive, Innovation Investment Fund, and Export Market Development Grant (Pettigrew 2012). Pettigrew (2012) explains that in the year 2009, the level of FDI (foreign direct investment) in Australias research and development was 1.1 percent, compared to more than 20 percent for Austria, the United Kingdom, and Ireland (P.2). In particular, Pettigrew attributes the low level of foreign business investment in the Australian research and development to less reliance on R & D in many business sectors and relatively high levels of natural capital as well as natural resources as a percentage of the countrys GDP (2012). However, as depicted on the ATS (Australian Technology Showcase) government website, Australia has set initiatives to facilitate a rapid technological growth rate in the Australian business world by inviting businesses to showcase their innovative ideas (ATS 2001).

Porters Five Forces Analysis

Internal Rivalry

The Sony Corporation operates in multiple industries including Joint Ventures, Game, Pictures, Electronics, and Financial Services. As a result, the Company faces intense rivalry across the sectors. In Australia, the most prevalent competitors are Micr...