Sony Corporation’s Strategic Alliances
Submitted by: Qiaomei Zhao
Student ID number: G20494143
Supervised by Mojisayo Abimbola
A project submitted in fulfillment of the requirements of the MD3003- Global Business Strategy
University of Central Lancashire
February 2011
Table of Contents
1. Introduction………………………………………………………………………. 2
1.1Background……………………………………………………………………….2
1.2 Definition …………………………………………………………………………2
1.3Types of strategic………………………………………………………………….2
2. Strategic alliances cases …………………………………………………………..2
2.1 Sony strategic alliances Hon Hai Group………………………………………..2
2.2 Sony joint venture with Discovery Communication and IMAX………….….3
2.3 Sony strategic alliances with Sharp……………………………………………..3
2.4 Sony strategic alliances with Ericsson…………………………………………..4
3. Reasons of strategic alliance…………………………………………………….4
4.1 Reasons of strategic alliance with Hon Hai Precision Industry………………4
4.2 Reasons of strategic alliance with Discovery Communication and IMAX…..5
4.3 Sony strategic alliances with Sharp…………………………………………….5
4.4 Sony strategic alliances with Ericsson…………………………………………..5
The Research paper on Strategic Alliance
The collaborations between companies have been one of the most critical changes in industrial field during the last three decades. Through outsourcing and taking off ‘non-core’ activities, corporate borders have been pulled back and large companies are increasingly cooperated with other companies to access resources and devote themselves to activities outside their own boundaries. Business ...
4. The risks and problems facing strategic alliances……………………………..6
5.5 Lack of trust………………………………………………………………………6
5.6 Lack of clear goals and objectives……………………………………………….6
4.3 Lack of coordination between management teams………………………….…6
5. Conclusion……………………………………………………………………….…7
References ………………………………………………….…………………………8
1. Introduction
1.1 Background
Sony Corporation is one of the largest worldwide electronics groups, which engaged in research development, manufacture, design and sale of electronic equipments, instruments, and devices for the consumer and industrial markets. Sony operate spread over 200 countries which across Europe, North America, and Asian countries. Sony’s headquarter is in Tokyo, Japan. There are approximately 171,300 employees. Sony is an innovative company, which using its competencies in miniaturization it has developed a vast range of home electronics products. Sony is a successful example which strategic alliances with other companies. Such as, Sony joint venture with Hon Hai Precision Industry, Discovery Communication and IMAX, Sharp and Ericsson.
1.2 Definition
A strategic alliance is where two or more organizations share activities and resources to pursue a strategy. They vary from simple two-partner alliances coproducing a product to one with multiple partners providing complex products and solutions. By the turn of the century the top 500 global companies had an average of 60 alliances each. This kind of joint development new strategies has become increasingly popular. (Johnson.Scholes.Whittington. 2008) this is because industries cannot always deal with gradually difficult environments or internal strategies alone. They may need to gain more materials, skills, innovation or access to markets, however, to recognize these may be as readily available throughout collaboration as throughout ownership.
1.3 Types of strategic
There are different types of strategic alliance. Some may be formalized inter-organizational relationships. At the other extreme, there are loose arrangements of cooperation and informal networking between organizations, with no shareholding or ownership involved in Joint ventures, consortia, networks. Joint ventures are relatively formalized alliances and may take different forms themselves. Consortia may involve two or more organizations in a joint venture arrangement typically more focused o a particular venture or project. Networks are informal arrangements where organizations can gain common benefits by working in strategic alliances without depending on cross-ownership arrangements and formal contracts. Other collusion arrangements have a contractual nature and improbable to engage in licensing, franchising management contract and turnkey operation. (Johnson.Scholes.Whittington. 2008)
The Business plan on International Joint venture
International Joint Ventures (IJVs) are becoming increasingly popular in the business world as they aid companies to form strategic alliances. These strategic alliances allow companies to gain ... is finalized. Examples of successful IJV Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company ...
2. Strategic alliances cases
3.1 Sony strategic alliances with Hon Hai Group
Sony Corporation signs an agreement with Taiwan’s Hon Hai group which is for the productions of LCD TVs in Americas region. This is strategic alliance with each other. Resting on this agreement, the Sony Corporation will sell 90 percent of its shares to Hon Hai Precision Industry in Sony Baja California. The industry property is associated with Sony Baja California’s Tijuana located in Mexico. It is mostly produces LCD TVs for the Americas region. Hon Hai Precision Industry will gain 90 percent shares in Baja California. Sony Corporation will retain 10 percent shares. Then the Tijuana region will stay behind a main manufacturing facility of Sony LCD TVs in Americas area. Hon Hai Precision Industry arranges the employee work in Tijuana site. (EMAsia Mag. 2009)
Focus on LCD TV business, Sony Group alleged that it is concentrating internal resources towards areas that will contribute to product differentiation, for instance, engineering, R&D, design. At the same time, it can establish a structure which enables the company to bring attractive products into the market at the earliest possible opportunity. Sony Corporation use leveraging external manufacturing resource to search for cut down the fixed costs, enhance other cost reductions, increase profitability and achieve business expansion.
3.2 Sony joint venture with Discovery Communication and IMAX
Sony joint venture with Discovery Communication and IMAX Corporation, these of three companies are the leading technology, media and entertainment corporations around the world. The three partners start on one of the first 24/7, totally programmed 3D television network in America. These three companies announced that they will take an unexpected collection of award-winning 3D content, television distribution, skill expertise and operational power to the project. The all 3D network will bring the highest quality and most immersive in home 3D viewing experience in the coming.
The Essay on Sony Company
Originally called Tokyo Tsushin Kogyo (Tokyo Telecommunications Engineering Company), Sony’s roots go back over half a century to 1946 when it was founded by Masaru Ibuka and Akio Morita. In the crippled post-war Japanese economy Ibuka and Morita made their living repairing radios and manufacturing small numbers of voltmeters whilst looking to develop a future in designing and manufacturing new ...
With strategic alliance, Sony Corporation is responsible for manufacturer of video, audio, communication and game. Discovery Communications using most sophisticated equipment to meet great supernatural research. The native 3D will bring a new dimension to the long running hit series seen regularly on the discovery channel. The most important things are that IMAX network use successful theatres distribution platforms for main event Hollywood films all over world. The IMAX theatres state that using IMAX 3D proprietary IMAX and IMAX DMR technology to create the best worldwide cinematic presentations. The IMAX brand is the immersive and astonishing entertainment experience for the consumers in the world. (Discovery SONY IMAX .2010)
3.3 Sony strategic alliances with Sharp
Sony Corporation signs a non-binding memorandum with Sharp Company to establish a joint venture company to produce and sell large-sized LCD panels and modules in 2008. This joint venture would employ the sales and manufacturing of liquid crystal panel and liquid crystal module. Then these two companies have been negotiating to enter into binding joint venture documentation. (Tom’s Hardware. 2008) In 2010, facing the financial crisis of two companies, they change the plan. Sony and sharp amended and complete the non-binding MOI to verify their mutual intent to delay the targeted establishment of a joint venture till March 2010.
3.4 Sony strategic alliances with Ericsson
In 2001, the mobile phone market have been announced that the agreement between two global giant companies. One is the do the telecommunication company Ericsson, on the other, Sony is do the communications and Entertainment Company. Ericsson is a Swedish company, which apply the telecommunication systems to customers. Sony is world-leading manufacturer, which apply the video, audio, communications, games and information technology products for personal or profession market.
The Essay on Sony Corporation Company Products Equipment
Sony Corporation-Company Information Sony was founded in Tokyo in 1946 by engineer Masaru Ibu ka and Akio Morita, a physicist. They started the company with 20 employees repairing electrical equipment and attempting to build their own products. The company's success started in 1946 when Sony launched Japan's first transistor and the first "all-transistor" radio in 1955. In the more than 50 years ...
In April 2001, Sony and Ericsson announced their intent to form Sony Ericsson, a joint venture to design, produce, develop, and market current and 3G mobile Communication division becoming the CEO of the joint venture. (Sony Ericsson.2002)
Sony will bring highest standard quality of alliance production possessions and production process. It also brings the complementary skill in entertainment skills and plans to enter their home country. Additional, Ericsson is responsible to bring the 3G infrastructures and R&D skills. Ericsson is in charge of establishing the global distribution network, therefore, there is stronger power to Sony enter the US and European market. Both of them have different culture between the Swedish Ericsson and Japanese Sony. The financial was shared 50/50 ownership. There are shared 2,500 workers in Ericsson and 1,500 employees in Sony. The reputational are both shared from Sony in Japan and Ericsson in Europe.
3. Reasons of strategic alliance
4.5 Reasons of strategic alliance with Hon Hai Precision Industry
The main benefit is that obtain new skills and the excellent quality. In strategic alliance, Sony Corporation use leveraging external manufacturing resource to search for cut down the fixed costs, enhance other cost reductions, increase profitability and complete business growth.
An alliance with a local company might facilitate the entry into a foreign market because the local partner understands domestic business conditions and has connections. If foreign companies are not allowed to business in a certain country, it could be the only way of market entry. A partnership reduces necessary fixed costs for each counterpart that equal the reduced risk of the investment.
There are some advantages in strategic alliances. A company that is racing for international market management requests alliances to help get into critical country markets rapidly and accelerate the process of creating a forceful global market presence. Gain inside knowledge about unfamiliar markets and cultures through alliances with local partners. For instance, Sony alliance with Hon hai group, it can obtain the local labor force. It can help Sony Company save the cost. Access valuable skills and competencies that are concentrated in particular geographic locations.
The Essay on Company strategic plan
According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are: ●poor sales due to economic downturn ●increases in expenses such as wage expenses. In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its ...
4.6 Reasons of strategic alliance with Discovery Communication and IMAX
Sony, Discovery Communication and IMAX, these three are the complementary companies. Sony Corporation is responsible for manufacturer of video, audio, communication and game. Discovery Communications using most sophisticated equipment to meet great supernatural research. IMAX Corporation is a leading and global provider of entertainment Technology Company, specializing in immersive motion picture technologies.
Joining complementary capabilities of two companies helps to create these skills and assets and might lead to a competitive advantage. (Thompson, J. 2001) Consequently, major advantages of alliances are that these companies can share the risk and to learn a new way or skills to do the business. The other party can improve competitiveness and leverages growth within the company’s core business.
4.7 Reasons of strategic alliance with Sharp
One of the advantages is that cut down financial risk and share costs and technologies. In strategic alliances, Sony Company reduces the dependence on the panel of Korea’s company. However, sharp also reduce the risk and finical pressure of building new part of company. Sharp adapt to alliances with Sony, it is benefit to them enter the new field and strengthen the R&D. There is more advance competitive in the world.
The most general reasons why Sony enter into strategic alliances are to cooperate with each other on technology or the development of hopeful new products, to conquer deficits in their technological and manufacturing expertise, to obtain new competencies together, to develop supply chain efficiency, to increase economies of scale in marketing, and to gain or enhance market access through joint marketing agreement. (Thompson,A. Strickland,J.2003)
4.8 Reasons of strategic alliance with Ericsson
There are some benefits to Sony. One is Sony chose growth strategies and entering new markets. Refer above, Ericsson is in charge of establishing the global distribution network, therefore, there is stronger power to Sony enter the US and European market. On the other hand, Ericsson Company shared their telecommunication experience with Sony Corporation. Sony has an admittance to enter Ericsson base station and 3G technology. Sony Company is share Ericsson’s the research and development facilitated contact to Ericsson handset core skill. The key advantage is joint venture can reduce the cost of research and development. Sony and Ericsson have more market share in the phone market. After joint venture, Sony Ericsson has increasing share market. (Wit,B. Meyer,R.2010)
The Essay on Sony Strategic Analysis, Executive Summary
Sony Corporation is a Japanese multinational conglomerate consisting of a number of business units (consumer electronics, gaming, movie production, music and financial services) making it one of the most comprehensive entertainment companies in the world. However, the start of the 21st Century has been a difficult period for Sony resulting in a decline in operating profits and share prices. A SWOT ...
The advantage of a joint venture is the alignment of focus and financial incentives through a separate physical entity. This separate physical entity will allow for a joint team to penetrate a key industry sector, driving a growth in 3G wireless services that is solution based.
The joint venture will allow Ericsson to maximize leverage of its first rate networks division, while leveraging Sony’s design and marketing core competencies. The joint venture also allow Sony to expand its access to the mobile communications device market at a time when 3G wireless networks are about to be rolled out in Japan.
4. The risks and problems facing strategic alliances
5.9 Lack of trust
There will be generated a sense of commitment during the partnership. In the case above, one corporation was successful and the other experience was failure. One corporation will point the failure finger and blame it. Ether of these companies does not solve the problems. However, if improve the pressure between the partnering corporations and often result in alliance damage.
This is most significant building the trust. The strategic alliance was allowed to be created to develop trust between individuals. The corporation should be including three kind of trust. It is equality, responsibility and reliability respectively. Some collusion companies were failed because of lacking trust and understanding. (Lewis,1992)
5.10 Lack of clear goals and objectives
Recently, many strategic alliances are shaped for the wrong reasons. This will lead to failure in the future. Some companies enter into alliances to resist industry competitors. The company senior manager feels that it will discourage competitors focusing their corporation. Conversely, this action will increase the existing troubles in the alliances companies. The alliance will focus on the spotlight of one company and cause more competitions. Alliances are shaped to right internal company problems. (Kilburn, 1999)
5.11 Lack of coordination between management teams
One reason that alliances fail is the inability of one partner or another to mobilize internal resources to support the initiative. Visionary alliance leaders may lack the organizational authority to access key resources necessary to ensure alliances success.
Although there are strategic alliances companies, there are not fitting with senior management because of the company lack of harmonization between management teams. (Bruner, 1999) If their relationship was broke up, one of them would probably end in a legal combat. Both of them cannot coordinate at all.
5. Conclusion
This report discusses the strategic alliance with Sony cases. Strategic alliances provide an alternative to an acquisition or joint venture. While they are designed to deliver synergy, cost savings and access to ether technology or market. It is generally acknowledged that the Japanese Companies in particular have developed real capabilities in alliance management and that many Western companies have looked upon them from a more defensive perspective. For instance, Sony company alliance with Hon Hai Precision Industry, Discovery Communication and IMAX, Sharp and Ericsson. Strategic alliance can encourage Sony company increase the market share and profit. On the other hand, if the strategic alliance was failed. It will also bring some problems to the company. Therefore, when the company strategic alliance with the other, it should consider the things such as circumstance and culture.
References
Bruner,R.F.(1999).
An analysis of value destruction and recovery in the alliance and proposed merger of Volvo and Renault. Journal of Financial Economics. Vol,3.No,2.P,125
Discovery SONY IMAX .(2010).
Available at: http://press.discovery.com/us/3net/press-releases/2010/3d-joint-venture-sony-discovery-communication-1134/. Accessed: 17th Februry 2011.
EMAsia Mag. (2009).
Available at: . Accessed: 15th February 2011.
Johnson, G. Scholes, K. Whittington, R. (2008).
Exploring Corporate Strategy:text &cases.8th ed. London: Pearson Education Limited.
Kilburn, D. (1999) partnership in cultural turmoil. Marketing week. Vol,38.No,15.P,23.
Lewis,J.D.(1992).
The new power of strategic alliances. Vol,2.No,5.P,46
Sony Ericsson.(2002).
Available at: . Accessed: 18th February 2011.
Thompson, A. Strickland, J.(2003).
Strategic Management: Concepts and Cases. New York: McGraw-Hill.
Thompson, J. (2001).
Strategic management.4th ed. London: Gray Publishing.
Tom’s Hardware. (2008).
Available at: http://www.tomshardware.com/news/sharp-sony-sign-memorandum-intent-create-joint-venture-large-size-lcd-panels-modules,4853.html. Accessed: 18th February 2011.
Wit, B. Meyer, R. (2010).
Strategy: Process, Content, Context. 4th ed. Hampshire: Cengage Learning EMEA.
