Critical Analysis Essay on Sony's Approach to Problem Solving

Published: 2021-08-18
1744 words
7 pages
15 min to read
Vanderbilt University
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Case study
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The ambitious pursuit of Sony Company as the company for life in all sectors of economy has failed to live to its slogan because of the many underlying problems faced since its inception. The expansion strategy beyond the film industry, provision of insurance services and banking proved unprofitable and extremely unrewarding. To click and lead the competitive business environment, a company invests heavily in rewarding managerial department and innovation.

Andriopoulos and Lewis (2010) identify Sony having been among the leading company in innovation and revolutionizing technological industry through networking. However, gradually the Sony company by 2013 is indicated to have lost innovation magic tag. (Naganathan, 2013)

Problems faced by Sony Corporation

Financial challenges

Despite of the company having huge infrastructure, the trading period between 2008 and 2011 the company was at great risk of survival because of its cash liquidity crisis. In 2011 quarter 1, the company made losses from the Television, Mobile phones and personal computers amounting to $312 million (Gershon, 2014).

In 2015 Sony Corporation had a total of liabilities and equity amounting to Yen 15,834,331 million out of which Yen 2,929,469 million was the equity. The total liabilities and equity for the 2016 financial year stood at Yen 16,673,390 million out of which Yen 3,124,410 million was the equity. This means if the corporation was to be liquidated or put under receivership within this two-year period, it would not be able to meet all its liabilities.

In the accounting period of 2014, Sony Corporation registered a loss of Yen 128,369 million, 2015 was another devastating year with a loss of Yen 125,980 million. Business picked up in 2016 and the Corporation registered positive results of Yen 147,791 in profits.

In 2014, the company paid dividends at the rate of Yen 25 per share and in 2016 the dividend rate reduced to Yen 20. No shareholder enjoyed dividends in the financial year of 2015.

Similar worse results were recorded from Sonys subsidiary. The consolidated financial report from the subsidiary recorded a mere profit of just Yen 59,541 million in 2014. 2015 and 2016 recorded a net loss of Yen 59,678 million and Yen 120,244 million respectively. (Chang and Rosenzweig, 2016).

Rahman and Bremer (2016) pointed out that this trend affecting the companys finances portray financial problems on return on investments. If the trend continues, the company could end up exiting the market.

Branding and Innovativeness

Whether the product is of superior or inferiority quality, the company used same logo and trademarks in all products ranging from television sets, radios, cameras, computers etcetera are branded with the same logo. This made customers perception on Sony products to decline. Investors perceived the company as non-strategizing at all. Branding brings about advertising flexibility (Barone and Jewell, 2014). It appears the company had blindly fallen in love with its brand for way too long. There was no market-hitting product innovated and rolled by the company. While stealing the market is a strategy used to win huge customer base, Sony appears to have slept on this innovation magic power. Every time the Sony Company launches a new product in the market, say a smart phone, the company labels the product with Sony Logo. This lowers the quality of the product since the consumer perceptions rings on the initial failed product portfolio. There are no changed tastes in customers consumption. The company is forced to reduce rates on its products. Giving all products, the same brand is considered as no strategy and innovation at all in the business world let alone the competitive environment.

It is only the Walkman innovation that made the company penetrate the market though it lasted very longest period in the market. Walkman music player ruled the market for 36 years. The company was unable to reckon with the competitive environment and re-engineer different success approaches like upgrade it. The innovation died with the launched properties. No additional features were included to the electronic device. What Sony lacks is the ability to respond to the changing market trends and digital concepts. When the company was underperforming, the entire business market especially on electronic and electrical components has migrated from the analogue to digital with Samsung, Huawei, LG and Apple being among the leading companies (Brahma, 2015). Sony, despite the veteran age, is paraded behind the technology world.

Lack of products competence

The company for over long period continued launching products that did not match the changing digital trends. Its analogue music market was lost to Apples iPod digital music market in 2012. Sony can only blame its internal operations for failed proactiveness to then developing business advancements. For instance, Sony Company continued manufacturing music systems with the same features like the phased serial and parallel ports ignoring the developing USB and wireless technology (Kipkemoi, 2017).

While Sony was stagnating without any product modification, the other companies, like Apple, launched iPods with touch screen features, Multimedia capabilities, high capacity internal and external data storage and which were portable and user friendly. In 2006, computer manufacturers such as Lenovo announced replacement Sony products (Stark, 2015).The included features in Apples products with their associated iTunes software allowed inter-transfer of videos, pictures and music in electronic formats. These Sonys product mismatch naturally kicked Sony out market.

The attempt of Sony Corporation to roll over Blu-ray storage devices has also failed to hit the market. Blu-ray technology is competing in the storage technology where the solid-state storage devices such as the Hard-disk (HD) and Flash disk together with optical storage media like Digital Versatile Disks (DVDs) products from the US based companies like Microsoft and Apple have dominated. Blu-ray devices are also costlier to as much as twice the HD despite both having more or less the same storage capacity. Consumers prefer the USB based storage devices again because of the user friendliness and the reliability associated with them. Data stored on them a accessed faster thus allowing fast processing of data stored on them. Again, these principles adopted by Sonys competing companies have edged the company out of market.

Costing and customer loyalty.Most of Sonys products are highly priced as compared to similar products from the different companies. Nintendos play station 3 (Ps3) witnessed higher sales as compared to Sonys play station 2 (Ps2). Sony Company found itself in a fixed place trying to sell its product. (Shein, et al.,2017). Sony Company installed the Blu-ray drive in its gaming devices making it costlier as compared to play stations designed and manufactured by other companies like the Nintendo. (Lee et al., 2017)

Sonys customers tend to buy products they deem as either superior, cheaper or having right preference to them as they move to other companies for alternative satisfactions. Sony Company has mistakenly tried to position itself in the market with high end quality and highly priced products at an expense of consumers. Unfortunately, customers see price tags first before noticing the quality of the products. Regardless of the quality, customers go for affordable products which are readily available as substitutes from Sonys competitors. This even creates bigger challenge for field marketers who face opposition trying to convince customers to buy their products. With diverse consumer prevalence behaviour patterns recorded alongside the changing technological tastes, Sony Corporation has to retain its customers through price strategy without compromising the quality.

Market Players

Considering that Sony operates in a field prevalent with fast changing technology with many providers wanting to join and expand the services, Sony Company has great challenge of reduced market share and stretching innovation. Many products with lesser technologies used to manufacture have flooded the market. An example of a mobile phone with all multipurpose features of internet connectivity, digital camera, multimedia systems, have automatically shipped Sonys major products like Sony camera. Except for professionals, it is extremely unlikely that Sony consumers will purchase Sony Digital Camera and video Camera for the same quality purpose offered by integrated smart phones.

Limited Supply Outlets

Sony has its headquarters in Japan where most of its production and assembling take place. For its products to be consumed in the far end destinations, it implies that their products must be shipped across the world. Their supplies are scattered meaning transportation costs are high. Their supply power is very low thus for them to close a buying-deal, they are forced either cut prices or look for alternative buyers. In choosing suppliers, the company seeks partnership with partners with strong financial base with ability to stock a certain line of company products. In appraising the partners, the partners shy away from the company. This complicates further the already struggling collaborative relationship terms.

Because of these prevailing circumstances, Sony company has been forced to seek partnership with other market players like Samsung in order to traverse their products to far end destination while keeping their input costs at minimum (Zahid and Shah, 2014). Consequently, the Sony corporation losses the dictating power of their products and end up negotiating prices with suppliers to arrive at reasonable prices. (Ukita, et al., 2014)

Online purchasing power

Buyers across the globe can access comparative prices of products within the same range as those of Sony Company. Sonys attempt to make products more appealing by enhancing graphical impression has not worked. In fact, products differentiations in Sonys trading industry are hard to differentiate. Therefore, customers only look for pocket friendly products by comparing the features especially when the buyer does so online.

Conservative management.There is a lot of managerial rigidity in Sony Corporation. The management team appears reluctant to adopt and employ emerging technologies especially developing systems with modern digital apps. They are not able to proact to implement and respond to the demands of revolutionizing world. Being among the oldest players in the industry, the management have lost focus on retaining the market share they had as well as accessing new markets.

The management has taken too long before launching a new product. Their aggressiveness is not seen anywhere their marketing spirit. The company is dormant.

The severe financial weakness evident in the liquidity position of the company can be attributed to managements position to invest in empire construction which ate so much of the companys financial resources. As a result, there was a challenge of decreased sales, poor performance at the stock market and investors lost confidence in the company.

As Sonys managers sought expansion across the global market, the companys heavy investments were subjected unforeseen and unfavourable economic challenges. Takayasu, (2013 reported the companys resilience as a result of currency fluctuation that was affecting profitability and the interest rates of the company.

Possible solutions Sonys problems

Financial solutions

For Sony to realize financial gains, it must focus on improving the sales and maintaining good quality of products it produces. When the sales are increased, the company will be in a...

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