The approach Sony continues to take is one of concentrating on continual process improvement to become more agile and resilient in the face of environmental factors (Olenick, 2010) while at the same time seeking to comply with national requirements for sustainability and green initiatives including supply chain compliance (Svensson, 2009).
Legal Factors -- Sony has a culture that embraces learning as a virtue, and continually strives to gain insights from the experiences of other Japanese companies and their legal and regulatory lessons learned. The case mentioned earlier of Toshiba Machinery Company and their sales of unauthorized milling machines to the Russians decades ago still is a foundational element of Japanese ethical training for managers (Ohishi, Naoto, 1993). As the United States and other western nations have continually seen the level of compliance and reporting escalate up through government edict, Sony has continually had to increase its focus on contract management and legal expertise across multiple geographic regions. The costs of this are among the highest the company incurs from a subsidiary standpoint, yet Sony senior management believes that ethical conduct is part of their brand and without it; they would lose the trust of both customers and governments globally.
Despite the global recession of the last three years, Sony continues to show financial resilience and the ability to bounce back from significant financial losses in 2009. During their last fiscal year, the company grew 4% year-over-year. If currency fluctuations are taken into account, Sony would have grown at a 13% rate from 2009 to 2001, an impressive ramp given the losses they experienced in 2009 (BusinessLine, 2010).
This financial growth was driven by Sony's core competencies in the areas of LCD television production, with sales up 19% year-over-year, and high-end Viao laptops, the sales of which are up 24% year-over-year (BusinessLine, 2010). These two product families are where the majority of R&D investment continues to be made by Sony, with heavy emphasis on HDNA technology and low power consumption laptops to meet the European Union green computing requirements (Chang, 2010). Most significant and illustrating these core competencies for the company, operating profit increase to ¥69B, up from an operating loss of ¥33B in the previous year. Sony management credits this significant revenue turn-around to the emphasis on process improvement and re-engineering, two critical areas of focus within the LCD TV and laptop business units (Olenick, 2010). The well-known Sony PlayStation 3 sold 3.5 million units in 2010, which is an improvement over previous years where the PlayStation did not sell over 3 million units (BusinessLine, 2010).
An internal analysis of Sony's financial performance also shows that the company has successfully been able to accurately discern just what R&D, sourcing, supply chain and production processes need to be modified quickly and thoroughly for the company to gain revenue coming out of 2010 (BusinessLine, 2010). Personal electronics including cameras, netbooks and MP3 players continued to gain market share and contribute to the turn-around in earnings from 2009 to 2010.
The internal analysis of Sony indicates that it has exceptional strength in research and development (R&D), accuracy and agility in defining which processes need to be changed and why (as is the case with LCD TVs and PCS0, and also has exceptional control over their distribution networks and channels globally. These results also indicate that the cost of manufacturing at Sony is higher than average for the industry, as their volume to profit levels are low compared to high tech electronics companies (BusinessLine, 2010). This is due to the high costs of operating in Japan and having the majority of its subsidiaries in the United Kingdom and the U.S., two countries that are relatively expensive to operate in.
Based on a thorough assessment of Sony's operations, its innate strengths at innovation and the relatively high cost to manufacture relative to competitors, the following SWOT analysis has been completed. Sony's strengths, as has been mentioned multiple times throughout this analysis, are their exceptional command of the innovation and R&D process. The structure of the organization itself as an enabler of innovation is clear, as it leads Japanese manufacturers in patents and in pace of innovation (Chang, 2010). Additional strengths include an exceptionally strong brand and geographic breadth of distribution channels. Sony's weaknesses a very high cost to manufacture and coordination of business units to mitigate losses quickly. Sony excels at process improvement yet cannot move quickly enough as an organization to alleviate the losses it incurred in 2009.
Sony's opportunities include a growing global and consumer industrial electronics market, greater levels of strategic alliances and acquisitions, and significant growth potential in the Brazil, Russia, India and China (BRIC) nations. Threats includes the ongoing fluctuations of foreign exchange rates, ongoing uncertainty over economic conditions, the rising level of compliance and regulations, and the recurring problem of counterfeit goods mostly throughout Asia and the Middle European countries (BusinessLine, 2010).
New Product Definition
Given the en masse adoption of social networks, the need exists for a digital camera that has a display large enough to support previewing images, videos and integrating them onto websites and blogs. The Canon Eleftria 5000 is the proposed product to meet this need. The unique selling proposition of the Eleftria 5000 is that it can be customized to the unique needs of the consumer. There will be over 100 different variations of the model that consumers can order online, in Sony stores and also from channel partner's websites. This is a digital camera meant to serve as a platform in much the same way that the Apple iPad has become the development platform of choice for many of the latest Apple applications. The focus on how to make the Eleftria 5000 a communications center that is smaller than an iPad yet can deliver high-resolution images is the goal of the product design and messaging. The design of the Eleftria 5000 is both lightweight yet also capable of supporting high resolution image editing and uploading on the fly. It will also have two-way conferencing capability and live interactive video and Web chat built into its operating system. Sony engineers it is a design that outdistances Apple at innovation and opens up significant growth opportunities for the company.
The following are the key marketing objectives for the Eleftria 5000:
1. To attain 50% gross margins through Sony Style Direct website sales by creating an online configurator capable of capturing the product design and in real-time communicating it to Sony factories and manufacturing outsource providers.
2. To attain 500,000 units sold throughout all distribution channels within the first six months of product introduction globally.
3. To earn 35% gross margin across all indirect channels within the first full year of sales.
The market segments that will find the Eleftria 5000 of the most value are males 18 -- 45 years of age who are interested in using the Eleftria 5000 as an interactive gaming platform in addition to conferencing device with f4riends. The secondary market are girls in the 18- to 45-year-old segment, whose interest in the Eleftria 5000 is also in the videoconferencing benefits, yet this group will be more active on Facebook and Twitter, according to studies of comparing iPad usage.
e-Business and Social Media Strategies
The product introduction will rely heavily on all forms of social media including interactive Web pages, a blog and also a series of Twitter accounts that will send out discount codes for consumers to get 10% off the Eleftria 5000. As part of the product introduction a YouTube contest will also be held to see who can create the most effective videos of the unique benefits and advantages of the Eleftria 5000. A Facebook Fan page and application will be developed that allows each new customer to upload their videos and share their initial pictures online as well.
The Eleftria 5000 will also have Eleftria Connect, which is 25GB of free storage for every customer who purchases the camera in the first 90 days. Eleftria Connect will be used as an incentive to get customers to upload their files and images, further creating a unique online experience of the camera. The goal is to create a unique online community where the experiences of using the Eleftria 5000 can be readily seen.
Based on an analysis of Securities and Exchange Commission (SEC) filings by Sony the following demographic profile has been developed for the Eleftria 5000.
Figure 1: Anticipated Demographic Segmentation for the Eleftria 5000
Source: Sony Corporation 1Ks and Securities and Exchange Commission Filings