Mid term report topic sony

TABLE OF FIGURES Figure 1: Sony Ericsson joint venture .... Sony has also formed a partnership with Ericsson, a renowned provider of Information and Communication Technology ICT to servi

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM

MID-TERM REPORT

TOPIC: SONY

Subject: International Business

Class: Advanced Finance 62C

Supervisor: Dr Bui Huy Nhuong

Students: Ha Thuy Hang 11201298

Hanoi, 11/2022

TABLE OF CONTENT

PART I: Overview of the company Error! Bookmark not defined

1 About Sony Corporation 1

2 About Sony - Ericsson (its member partner) 1

3 Vision 2

4 Objectives 3

PART II: Reasons why they decided to choose joint venture as entry mode at that time of entry 3

1 National environments 3

1.1 Japan 3

1.2 Sweden 4

2 Business situation 5

PART III: Factors affecting joint venture partners 7

1 Culture 7

2 Strategy 8

2.1 Absorptive Capability 8

2.2 Market power 8

2.3 Product Relatedness 8

2.4 Market Experience 9

3 Company structure 10

3.1 Firm Size 10

3.2 International Business Experience 10

3.3 Previous Cooperative Experience 11

3.4 Organizational Structure 12

4 Finance 12

4.1 Investment Assessment and Capital Budgeting 12

4.2 Risk Management 12

4.3 Exposure Hedging 13

4.4 Financial Ability 13

Part V: Criteria 14

1 Goal compatibility 14

2 Resources complementary 14

3 Commitment 15

4 Capability 16

REFERENCES 20

TABLE OF FIGURES

Figure 1: Sony Ericsson joint venture 2

Figure 2: Japan's Economic Situation in the Lost Decade 4

Figure 3: Real Income Growth (GDP) in Sweden, 1986-2000 (in %) 5

Figure 4: Sony Ericsson product 9

Figure 5: A journey to become successful joint ventures 14

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PART I: OVERVIEW OF THE COMPANY

Sony is one of the most well-known electronics businesses in the world Sony has several collaborative ventures, including one with Union Carbide to produce Eveready batteries in Japan In addition, the corporation manages a life insurance company in collaboration with the Prudential Life Insurance

Company and a company that imports and promotes Wilson sports equipment in collaboration with PepsiCo Sony has also formed a partnership with Ericsson, a renowned provider of Information and Communication Technology (ICT) to service providers

In this report, the alliance between Sony and Ericsson is chosen to analyze

1 About Sony Corporation

Sony is one of the most well-known electronics businesses in the world The corporation, which was founded in Japan, has evolved from humble beginnings to become an international behemoth Sony's record of the invention has kept the firm prosperous for more than 60 years, from the tape player to the Walkman to the OLED TV Kazuo Hirai, who joined the business in 1984 and rose through its media and consumer electronics divisions, was named president and CEO in 2012

It is a Japanese multinational corporation that ranks among the top producers of electronics goods for both the consumer and business markets In essence, it is a top producer of communications, information technology, video games, audio, and video goods for both the consumer and professional industries Sony is in a great position to become a global leader in personal broadband entertainment

2 About Sony - Ericsson (its member partner)

A joint venture between Sony and Ericsson called Sony-Ericsson was established on October 1st, 2001 They begin cooperating because they aim to establish themselves as a communication entertainment brand by encouraging people to engage in activities more than simple communication and providing tools for everyone to design and take part in entertainment experiences

experiences when communication and entertainment are muddled The primary headquarters of Sony Ericsson is in London

Figure 1: Sony Ericsson joint-venture

3 Vision

“To become the communication entertainment brand, by inspiring people

to do more than just communicate, and enabling everyone to create and participate in entertainment experiences Experiences that blur the lines between communication and entertainment.”

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4 Objectives

The main objective of this joint venture is “to develop an alliance that would allow Ericsson to reduce spending on the costly development of next-generation mobile phones at a time when many European telecom companies see their inventories piling up as the world’s cell phone market is growing much more slowly.”

PART II: REASONS WHY THEY DECIDED TO CHOOSE JOINT VENTURE AS ENTRY MODE AT THAT TIME OF ENTRY

1 National environments

1.1 Japan

Japan's economy started to take shape in the late 1980s and carried out major economic conduct at the extreme point of 1997 1998 The 1990 Japanese –economic crisis with the creation of the Japanese bubble economy concept However, the 1990s' effects on Japan's economy and financial performance were limited to that nation The economic crisis of 1990 had a significant impact on the growth of the Japanese economy from 2000 to the present; it helped Japan to recognize its limitations in terms of economic development while also highlighting the reasons for failure in the most apparent way Since then, the Japanese government has had a foundation upon which to decide and implement more suitable policies, in order to restore the flagging economy and advance it in the direction of the development it is now Japan has gone through a terrible decade since 2000, entering a new decade and the start

of a new millennium, even though the Japanese economy is currently still experiencing a protracted slump This time in Japanese economic history was characterized by bad loans and a crisis in the country's development paradigm Japanese Prime Minister Koizumi started settling these bad debts by some

Sweden implemented a significant structural reform program in response

to the crises of the early 1990s Up until now, the main emphasis has been on the macroeconomic components of Sweden's reforms, which have included the establishment of a flexible exchange rate with an independent central bank, the

pursuit of price stability, and the development of governmental budgetary discipline It is clear that these macroeconomic reforms helped the economy recover, but it is less generally recognized that a significant element of the Swedish reform plan was geared at improving market microeconomic functioning, which sparked a significant industrial restructuring process in the business sector Governments also didn't reverse the reforms after they were implemented, which was essential to their success Between 1995 and 2011, Sweden already had the highest worker productivity and competitiveness of any Organization for Economic Cooperation and Development (OECD) nation, tied with Ireland and the United States (OECD 2013) The major causes of Sweden's productivity development have likewise been those that have made its corporate sector more efficient

Figure 3: Real Income Growth (GDP) in Sweden, 1986-2000 (in %)

2 Business situation

The first step taken by Sony is to seek a partner to investigate Global System for Mobile Communications and Code Division Multiple Access technologies In the 1990s, Sony formed an informal alliance with Siemens and

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Qualcomm In the Qualcomm case, Sony and Qualcomm jointly developed Code Division Multiple Access technologies, but the products were sold separately under two brand names This informal relationship, along with the partnership with Siemens, was ultimately driven by the rivalry Sony, however, understood it would be very expensive to perform telecom technology R&D on its own Numerous partner prospects, including Motorola, Alcatel, and Nokia, had been taken into consideration before Sony and Ericsson signed a Memorandum of Understanding

Ericsson was searching for a partner to take over the operations for phones at the time because it had suffered a significant operating loss in 2000 Many possible candidates had been chosen One of them was Sony Sony has a competitive advantage in the multi-media consumer electronics market, but its designing and innovation capabilities had been constrained At first, Sony sought to seize control of every aspect of the business, including fundamental technology, distribution, and marketing The fundamental handset technology, which was created by Ericsson Mobile Platforms, was not, however, something that the company's top management wanted to give up Thus, Sony rejected Ericsson's proposal for a soft alliance and insisted instead on a joint venture agreement

The decision to form a joint venture was crucial for Sony since it provided a means for the business to significantly increase its market share in the mobile phone industry by using Ericsson's reputation and manufacturing skills While Sony was only able to provide 7.5 million handsets in 2000, Ericsson shipped over 41 million Ericsson, on the other hand, was in a greatposition to benefit from Sony's cutting-edge mobile phone technology For instance, Sony created a phone model that supports music playback from its brand of memory card

PART III: FACTORS AFFECTING JOINT VENTURE

PARTNERS

1 Culture

Sony and Ericsson had two distinct corporate cultures Combining a sizable group of people from a completely different cultures proved challenging Sony was a significant global corporation It yet maintained a viewpoint on business strategy, marketing, design, and product development that was distinct from that of other western businesses In contrast to Sony, Ericsson was a low-masculinity company with strong gender equality, minimal work stress, and a focus on teamwork In contrast to western businesses, traditional Japanese businesses did not allow employees to question the boss's directives As a result, Sony-Ericsson developed its own corporate value, which

is "Passionate, Innovative, and Responsive."

The two groups' different cultural philosophies greatly hampered their ability to work together In 2008, the CEO of Sony raised a similar concern, saying it would be exceedingly challenging for the two companies to continue working together if they couldn't agree on a common aim In general, the joint venture encountered a number of problems throughout its first two years This had a direct impact on Sony-Ericsson's financial results The collaboration almost came to an end as a result of this poor performance However, in the end, the joint venture received funding from both Sony and Ericsson Sony-Ericsson functions largely satisfactorily Joint ventures allowed Sony to get back to global business by accessing Ericsson's long-established network Additionally, expenses are split between the two parties to reduce the risk of a bad investment Additionally, Ericsson might improve upon its earlier subpar performance in Sony's strong areas of a product division and brand awareness

Sony also obtained access to the market share, infrastructure network, and handset technologies of Ericsson Sony's expertise in consumer electronics, stylish designs, and manufacturing techniques could benefit Ericsson

2.2 Market power

Sony excelled at consumer multimedia electronics in 2001 The Walkman portfolio was the initial product line Sony gave Sony-Ericsson access to their multimedia technology while Ericsson played the major role in that deal, Sony-Ericsson contributed the core handset technology and telecom infrastructure that allowed Sony-Ericsson to release a series of mobile phones based on collaboration with telecom operators

2.3 Product Relatedness

While Ericsson sold infrastructure, software, and services in information and communications technology for telecommunications service providers and enterprises, including, among others, 3G, 4G, and 5G equipment as well as Internet Protocol (I.P ), Sony's product line had focused on the fields of consumer electronics such as color televisions, audio & video products, video games, and specialized electronics such as broadcasting equipment

Figure 4: Sony Ericsson product

Following the merger, Sony Ericsson focused mostly on the following segments: photography, music, business (email and web), all-arounder, design, price-conscious, and environmentally friendly phones The business named its phone products in three different ways Depending on when they were introduced to the market, mobile items have names of three, four, or five characters

2.4 Market Experience

Before the partnership, Sony's situation in Japan was largely favorable They also discovered that the mobile industry is expanding Although Sony was very good at product design, it was not a significant player in the worldwide GSM industry It wouldn't be difficult for Sony to increase its current market share by 2%

However, Sony needed more than just product design and multimedia know-how if it wanted to be a major player Sony believed a joint venture would be the best option to cooperate with a partner in this industry based on

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previous experience with soft alliances The advantage of working with Ericsson was that it made it easier to enter the European market Ericsson ranked third in the mobile phone market in 2000, allowing Sony to easily enter the European market with this partner while also building the brand name for Sony's other businesses such as television

3 Company structure

3.1 Firm Size

Sony was one of the world's leading manufacturers of consumer electrical goods such as compact disc players, mobile and cordless phones, computer peripherals, and television systems in 2001

Ericsson, on the other hand, had been operating its mobile business in the market for years prior to the collaboration Ericsson was the world's third-largest producer of mobile handsets at the time, trailing only Nokia and Motorola

3.2 International Business Experience

 Sony

In 1960, Sony established a trade office in New York City and another in Switzerland called Sony Overseas, following a business dispute with Delmonico International, the company Morita had appointed to handle international sales

In 1970, Sony Overseas established a subsidiary in West Germany to handle sales there

In 1973, The Trinitron series received another Emmy, the year Sony Overseas established a French subsidiary

On November 29, 1985, Sony Corporation of America, which operated several assembly plants in the United States, paid $2 billion for CBS Records