Business Analysis on Sony Corporation for the years between 2001 and 2011
Looking back on the past decade of Sony Corporation, opportunities walked along with challenges. The “combination of giants” between Sony and Ericsson caught attention of the whole world. The invention of mini vertical mobile phone promptly captured the youth market. When Sony Ericsson was at its best, its sales figures were ranking Top Three in European and American markets. However, since 2008, Sony Ericsson almost has opted out of the top list in mobile phone industry. The revolution of iPhone and Android ruined Sony Ericsson’s confidence thoroughly. In addition, the political conflicts and historical factors, such as Diaoyu Island incident, to some extent, have affected the sales in recent years further. Our business analysis emphasizes on the development of Sony Corporation during the period from 2001 to 2011, especially the overseas market expansion in mobile phone industry. We will introduce the development process of Sony and the challenges they faced or will face from three perspectives: business, political and socio-cultural factors. Besides, we, as well as Sony Corporation, concentrate most is how to turn these challenges to the opportunities. Firstly, let us illustrate the organizational structure of Sony Ericsson, especially Sony Ericsson China. The market share of Ericsson has ever ranking no.3 in global mobile phone market in late 90s of 20 century. Their promoting strategy in Chinese regions made an excellent success because of selecting LIU Dehua and JIN Chengwu as spokesmen. However, Ericsson suffered a huge loss resulting from a mistake in generating strategy in 2000. Meanwhile, Sony mobile phone could scarcely capture the market share, for they were too late to get access to the GSM (Global System for Mobile Communications) market. It was in this context that Sony and Ericsson reached a consensus that each of their mobile phone departments subscribed 50 percent shares to establish a joint venture corporation, that is, Sony Ericsson. They two operated the company together that Ericsson was responsible for technology and quality control while Sony was in charge of the outlook design and sales. The organizational structure is as following.
Since 2008, the tablet revolution led by Apple and Android has inflicted a severe impact on Sony Ericsson. In 2011, Sony broke up with Ericsson and purchased the remaining 50 percent shares owned by Ericsson before. Sony kept the mobile phone production department, but their market share cannot be compared to the past.
Secondly, the development of Sony mobile phones went through a tough procedure. Let’s briefly review the milestones and look forward to the future.
Sony Ericsson sustained high losses in the first two years, until T618 was launched in 2003. T618 was an influential mobile phone type which directly turned SE into profits. And then, to make full use of Sony’s technology in Walkman, SE launched W800 in 2005, bringing the concept of music phone to the public. After that, K790 was the first professional camera phone with flashlight, which beyond any other brands at that time. The net income in Sony reached a peak in 2008 with 369,435 yen in millions, while it decreased abruptly in 2009 resulting from the rapid rise of Apple and Android. The cooperation with Android cannot revived SE as the development of X10i and Xperia arc Lt15i could not make ends meet. The continuing losses upset Ericsson and accelerated the termination of the contract between Sony and Ericsson. Therefore, we recommend that Sony should change their marketing strategies to “low cost, low price” strategy in order to capture the markets in developing countries.
In addition, the conclusion of financial annual reports in the past decade is one of the core factors to evaluate the development of Sony. SONY 's Net Income(Loss) 2001-2011
Net Income (Loss)
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