Sony Ericsson was within 2001 as a join opportunity of Sony Company and Telefonaktiebolaget LM Ericsson to provide cell phones and accessories. It is a general public company which is working in mobile telecommunications industry. In 2008, Sony Ericsson was the third-largest mobile phone manufacturing company on the globe, size and sales were 97 million units and 11. 2 billion. Sony Ericsson has about 9000 employees and operations in over 80 countries.
Sony Ericsson is an progressive company and has developed very fast in period 2002-2008. Sony Ericsson's cellular phone is considered as the best entertaining one in the world. Moreover, I really was impressed by the Walkman-branded W series music phones and Cyber-shot-branded K series camera phones.
Sony Ericsson was established in 2001 as a jv of Sony Company and Telefonaktiebolaget LM Ericsson and operating in mobile telecommunication industry. The industry is at the beginning of maturity stage and Sony Ericsson is facing a lot of difficulty because of monetary recession as well. To make it through and develop in this situation, company needs to understand and improve the key factors of success such as company must be more innovative, take good thing about technology and so forth. Additionally, Sony Ericsson is also facing the high pressure and competition of existing companies, stakeholders and substitute products and services.
To take care of with the existing situation, company must take advantage of inner strengths and reduce its weaknesses. Company's strengths are the technological advantage, diversity, variety of suppliers and good control of costs and bills. In the same way, company should try to reduce the weaknesses of late start, ethnic differences, distribution channels and smart phone segment. In addition, company may take good thing about opportunities including the technology's development, potential marketplaces, globalization and experienced man-power while avoid the threat of trojan, recession, impacts of phone's signal and high competition among the list of industry.
Sony Ericsson must apply both short term and long term strategies. Firstly, it is important to minimize the recession's affect by minimizing costs, expenditures and workforce. Second of all, company may extend the business to the new marketplaces which are expanding countries. Lastly, in long-term company should pay more attention on the impact of mobile phone to health insurance and environment. To apply these strategies, it's important to improve or change the structure, system and plan. The suitable composition must be more flexible, fast responding to market's changes. Sony Ericsson also offers to improve the information system and develop the product take-back system. Finally, company must make changes on selecting policy and restrict the policy to ensure the compliance of suppliers in respecting individual rights.
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Industry life cycle
Time
mobile telecommunications industry
Mobile telecommunications industry
Industry output
Introduction Progress Maturity Decline
The diagram above implies that the mobile telecommunication industry now could be at the beginning of maturity period. In this period, the industry does not grow just as much as last 5 or 6 years. The industry is dominated by few large companies such as Nokia, Samsung, Sony Ericsson, T-mobile, LG and Vodaphone. The high competition only takes place between these large companies. Growing countries are potential marketplaces with popular. In addition, all of the mobile phone's functions is provided next to the original function. For example, with a cellular phone, users can access to internet, play game, pay attention to music, take picture, watch movie.
Moreover, nowadays the clients become more advanced, quality demand is higher and price is an essential issue. That forces the provider to be more progressive, lower-cost product as well as differentiate their product and improve customer services. However, the speedy development of technology still brings about the introduction of mobile telecommunications industry. Technology end up being the lever of industry and determines the quality and the price of production. So I assume that in near future, mobile telecommunications industry still can get more achievement to contribute to the economy's development.
There are some strategies may be applied to use talents to take advantage of opportunities. The business may concentrate on and increase the function of the telephone. That will help to catch the attention of more customers who are interested in the effectiveness and functions of cellular phone. In addition, widening to new market- developing countries- is also can be a good strategy. Expanding countries are potential market segments where provides a plenty volume of customers. Sony Ericsson quite can be successful at new market if company may use strengths properly. Last but not least, it's important to improve selecting policy. Under recession, company requires to lessen costs of labor force. Trained man-power is surplus so company may reduce ineffective employees and recruit better one.
WO strategies
To take good thing about opportunities by overcoming weaknesses, Sony Ericsson may start more distribution channels at the countries where entrance barriers are low. As well as beginning new distribution channels, it's necessary to train employees to boost quality and efficiency of these vendors. In addition, it's very important to Sony Ericsson to get over the weaknesses of smart phone segment. To do so, research and develop appropriate technologies are the best methods. Finally, the business may expand the business enterprise to new markets to increase its affects and brand. Expanding to expanding countries is an excellent choice.
ST strategies
Sony Ericsson is facing a whole lot of threats, it is rather very important to company to work with its talents properly to take care of with these threats. Sony Ericsson is growing Green heart technique to reduce the impact of mobile phone to health insurance and environment. It offers factor such as bio-plastic housings, plastic keypads, and environmentally-conscious packaging. Moreover, to lessen the impact of recession, the company must apply lower costs strategies. Sony Ericsson is trying to reduce the operating bills and workforce whenever you can to minimize the loss. Finally, product take-back and recycling should be employed. Sony Ericsson will the merchandise take-back and recycling through collection items throughout the world.
WT strategies
There are some strategies that Sony Ericsson may use to reduce weakness and avoid threat. Under recession, minimize the costs is very important. Company may decrease the retails or office buildings where will work ineffectively. Trimming off the pointless costs is also an efficient way to reduce loss. At exactly the same time, company should improve the advertisement to expose the business to public. It's important to enhance the company brand through advertisements, marketing promotions, impressed design and especially quality improvement.
Assessment of company's performance:
Efficiency:
Sony Ericsson is operating successfully as a manufacturer and making use of their strategies. In 2008, level and sales were 97 million systems and 11. 2 billion respectively. In 2009 2009, under strong recession's affects, volume and sales were lowered but the company tried to minimize the reduction. The first quarter of 2009, models shipped and online sales were 14. 5 million products and 1, 736 million, lowered about 35% if compare to same period in 2008. The data shown is more positive if compare to forecast of analyst about company's situation in 2009 2009. Facing all troubles, in '09 2009 Sony Ericsson still remains the most notable position in mobile phones manufacturing industry.
Effectiveness:
Sony Ericsson is implementing the required strategies effectively. The business has comprehensive operating expenses cost decrease programs of 880 million and cost of sales decrease programs set up with the ambition to revive profitability. By March 31, 2009, Sony Ericsson retained a strong net cash position of 1. 1 billion. Sony Ericsson is making use of positive ways of bringing company back to profitability as fast as possible. At exactly the same time, long term strategy to reduce impacts of phones to health and environment has been started out. Generally, Sony Ericsson is delivering its ways of implementation effectively.
Return on investment:
Sony Ericsson is a good choice for investment. In first quarter of 2008, Sony Ericsson made a dividend repayment of 470 million to parent or guardian company. However, in '09 2009, there are a few decreases in term of profits on return resulted from the negative impacts of recession. Market show in the first quarter lowered and is currently predicted to be around 6%, down two ratio details sequentially.
Review of strategic possibilities to company:
There are some proper options available to the success of Sony Ericsson. In a nutshell term, it's important for Sony Ericsson to use costs keeping program. The business must keep your charges down, operating expenditures and workforce to minimize loss under recession. Moreover, it's important to decrease the ineffective retails. The ineffective retails not only increase costs and expenses but also have an impact on the brand of company. At exactly the same time, developing countries are potential market segments of mobile telecommunications industry. It really is a great chance for Sony Ericsson to increase to new market through setting up distribution channels there. In order to gain competitive edge, Sony Ericsson must develop technologies to boost products' functions, especially smart phone segment. Smartphone segment remain some weaknesses, it's important to recognize and improve them.
On the other side, Sony Ericsson must focus on permanent strategies. Firstly, Green heart strategy can be an available option to lessen the impact of cellular phone to health insurance and environment. It offers element such as bio-plastic housings, recycled plastic keypads, and environmentally-conscious packaging. Furthermore, product take-back and recycling should be applied. Sony Ericsson introduces legislations to address this subject and participate in the process to put into practice these legislations. This can help to minimize the effects of products to environment. Finally, Sony Ericsson should focus on building brand. They are able to do that through advertisements, broadening business or setting up more distribution channels.
Recommend for future route:
For future direction, Sony Ericsson may apply some strategies. To handle with recession, it's important for Sony Ericsson to apply costs keeping program. This strategy focus on minimizing costs, expenses and workforce to reduce loss. After recession, company should continue growing to new marketplaces- developing countries. Sony Ericsson should concentrate on quality and number issue, increase quantity of distribution channels as well as functions of products, especially smartphone segment. For long-term strategies, Green heart and soul strategy and product take-back are essential. These strategies are of help to lessen the impact of cellular phone to health insurance and environment.
Implementation of new strategies
Structure
The current economy is very unbalanced and emergent. That leads to the fluctuation and doubt of the mobile telecommunications industry. In this situation, Sony Ericsson must make some adjustments about the business structure. The composition needs to become more flexible, fast responding to the change of market. The suitable structure should be considered a horizontal framework, which is flexible, easy to improve and improve. Such that it is simpler for company to form the team or small groupings to handle with the market's issues. The new framework is more flexible but still remains effectiveness for the business. In this structure, each department have to be more independent in working, decision making and employing the strategies.
System
To apply these strategies, Sony Ericsson may improve and update the info system. Company should develop the software-based system to acquire full materials declarations for many components and parts in its products, including all chemical substances in the components. In addition, company should enhance the product take-back system to increase its efficiency through more collection point. All phones received at collection factors will be recycled within an environmentally appropriate way.
Policy
To put into action the new strategies in current situation, it is important for Sony Ericsson to improve the hiring insurance plan. The recession forces the company to reduce labor force therefore the hiring policy must be altered. Company should reduce the quantity of employees while gain degree of recruitment to employ better employees who can execute the new strategies and also have abilities to reply fast to the change of overall economy. Moreover, to apply these strategies, Sony Ericsson must apply the insurance plan with supplier to ensure that they comply to the laws and regulations to respect human rights and reduce negative impact with environment.
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Usefulness of tactical management models:
Industry life pattern model:
Industry life routine model is a good tool for analyzing the consequences of industry's evolution on competitive forces. It includes four phases: introduction, progress, maturity and decline. Industry life cycle model helps us to comprehend history and current situation of the industry as well as the characteristics of industry in current period. Therefore, company may have suitable strategies to endure and compete with other competitors. An understanding of industry life routine model also helps competing companies to make it through during period of transition.
Industry matrix:
Industry matrix analyzes the main element success factors which can affect significantly the entire competitive positions of all companies within any particular industry. They are simply determined by the economic and the technical characteristics of the industry. The matrix provides weight for every single factor based about how important that factor is perfect for success and specifies how well various opponents on the market are giving an answer to each factor. By knowledge of industry matrix, companies can know which the most important factors are, how well the firms do and which factors need improvement.
Porter's five forces evaluation:
Porter's five forces research derives six forces that impact your competition within any industry; they are really risk of new entrants, rivalry among existing organizations, threat of alternative products or services, bargaining electric power of purchasers, bargaining electricity of company and lastly comparative vitality of other stakeholders. By ranking each competitive power as high, medium or lower in strength, the companies may understand the pressure of those factors within the industry. Companies may know where in fact the pressure is high so that pay more attention.
SWOT research:
SWOT analysis is used to judge the talents and weaknesses of the business and the opportunities and threats that company is facing. The SWOT analysis provides information that is helpful in complementing the firm's resources and functions to the competitive environment where it functions. SWOT helps the company to aware of current situation (internal and external) therefore can put together properly strategies. Derive from SWOT, company can form TOWS matrix to generate the best strategies.
Strategic factor evaluation summary matrix:
The strategic factor analysis brief summary matrix summarizes an organization's tactical factors by merging external factors and inside factors. The highest weighted external factors and interior factors should come in this matrix. It really is useful to identify a niche where an organization may use its main competencies to consider advantage of a specific market opportunity. Furthermore, this matrix helps the business to identify the duration of the factors. Therefore, the business can have ideal strategies on the right time.
TOWS matrix:
The TOWS matrix illustrates how the external opportunities and threats facing a particular company can be matched with this company's talents and weaknesses to bring about 4 units of possible strategic alternatives. It is very useful for generating a series of alternatives that the decision makers of a company or business product might not normally have considered. It can be used for the corporation all together or it can be used for a particular business unit inside a corporation.
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