Introduction
This newspaper shall discuss the rationale behind the Sony Ericsson joint venture partnership, which was finalized in 2001. The researcher desires to review the motivations, goals and strategies adopted by the lovers in order to attain their mutual aims, regardless of the dismal organizational performance that they have been showing since the start of venture.
The present state of the global business landscape today has forced organizations to create more creative means of making it through and keeping before their competitors. A number of the more important aspects that most companies today are concentrating on to improve their overall performance are enhancing their brand id, linking with customers and appealing to proficient and highly-skilled staff (Isidro, 2000). Furthermore, today's corporate professionals are also facing an extremely competitive environment "that is progressively more complex, globally focused, and technologically uncertain where there is a critical need for dynamic, versatile, and proactive responses" (Kilometers, Preece, and Baetz, 1999). It is no longer enough to point out on creating and maximizing opportunities on their own, because independence also offers its drawbacks.
As due to the various pressures that companies are facing, there is now an increased trend included in this to favor forging proper partnerships and alliances as a viable business option. Through the past due 1990s and into the early on years of the new millennium, most companies experienced unprecedented success in obtaining equity capital by means of capital raising financings and general population offerings. The capital was also obtained at high valuations and on very beneficial terms to the company.
The financial downturn, however, improved the destiny of business owners as the availability of equity capital lowered dramatically. And even though it was available to them, the valuations were much lower than before and the terms more and only the trader. Thus, there has been a growing need to forge proper alliances as a good alternative to survive the unfavorable economical situation, especially for it and life sciences companies (Hutchison and Mason, 2001).
The researcher has analyzed several information items, websites and academic papers that specifically talk about the labor and birth and the continuing progress (or lack thereof) of the Sony Ericsson joint venture. This paper will be split into two further portions: the first can look at the motivations and seeks behind the establishment of the collaboration, the next will discuss the problems that the new company has faced with regards to reaching its performance aims. The second section will concentrate moreover on the strategies adopted by Sony Ericsson to beat their complications as well as an analysis of the suitability of such solutions.
The Sony Ericsson joint venture: an overview
Talks about the jv between your Japanese consumer electronics company Sony Company and the Swedish telecommunications producer L. M. Ericsson first started in Apr 2001, and the deal was finalized in October upon agreement of the plank of directors of the individual companies (Yamada 2001). Sony is one of the world's leading manufacturers of consumer electric powered goods like compact disc equipment, mobile and cordless telephones, computer related devices and television set systems.
On the other side, Ericsson was then the world's third greatest developer of mobile handsets (Yamada 2001), with Nokia and Motorola taking up the top two places (Hesseldahl 2002). Despite its apparently strong business, Ericsson actually experienced a severe drop in its gross annual profits the year that the deal had been ironed out, having suffered a loss of $1. 39 billion in the 2nd 1 / 4 of 2001. The company was also established to lessen its workforce by almost 20 percent at that time, which only underscored the actual fact that it was in dire straits when the Sony proposal to unveiling a jv came in (Olavsrud 2001). In addition, the business was then taking into consideration the option to outsource its handset production, which was one of the most expensive areas in its operation (Yamada 2001).
The proceed to enter in to a joint venture was very important to Sony as it was one method for the company to broaden its show of the cellular phone market considerably by profiting from Ericsson's brand and manufacturing features. In 2000, Ericsson delivered above 41 million handset systems while Sony was able to deliver only 7. 5 million. As for Ericsson, it was in an outstanding position to use good thing about Sony's advanced mobile phone technology. For example, Sony produced a handset model that can play music through its proprietary memory card.
Most global telecommunication companies have been experiencing very little marginal revenue in their handset sales due to the stiff price competition with their competitors in the industry. The anticipations of the buyer market have also required telecom companies to invest more in research and development for the next-generation cell phones, and finally to collaborations like this of Sony and Ericsson. Prior to their joint venture, Toshiba and Siemens have also created a scientific partnership for the introduction of next-generation handsets.
The primary inspiration for entering into the jv can be followed back to Sony Corporation's prefer to revitalize its carry above the global cellular phone industry (Yamada 2001). Initially, Ericsson only wanted to sell Sony its mobile phone division however the latter preferred an entire integration. The jv then seemed to be the most perfect option for both companies, thus giving climb to Sony Ericsson Mobile Telecommunications AB. The business is based in London and uses more than 4, 000 staff. Their jv is had 50:50 by both lovers but a previous Sony top professional, Hideki Komiyama, leads the company's management team.
To particular date, Sony Ericsson is one of the world's most trusted providers of mobile multi-media devices like state-of-the-art cellular handsets, accessories and PC credit cards. The Sony Ericsson brand is popular for its advanced technology telephones having top-level applications for mobile imaging, music, design and more. Their wide selection of handsets is tailor-made for different basic level markets and users. Sony Ericsson envisions itself to be the world's number 1 communication entertainment brand, enabling its users to do more than just communicate with one another.
The Sony Ericsson jv: issues and challenges
Despite the buzz behind the Sony Ericsson jv, initial results have shown that it had not been working well and the aims that have motivated the collaboration in the first place aren't being found. While both Nokia and Motorola could actually hold on to their respected positions in the global cell phones market, Sony Ericsson got slipped behind them, landing below the South Korean company Samsung and the German large Siemens. These five firms now form the most notable five global mobile handset manufacturers today.
Sony Ericsson has constantly shown poor income and performance despite the infusion of high-end technology and the barrage of promotion that followed the joint venture. The brand new company's first type of cell phones was introduced to the marketplace in March 2002 but received only lukewarm response from consumers. For a while, Ericsson's chief executive officer, Kurt Hellstrom, threatened to grab of the collaboration because the business's profits have never been converted around, even with the involvement of Sony (Hesseldahl 2002). In addition, job loss within the company continuing to increase even after it possessed initially let go some 22, 000 personnel.
The jv was released with much fanfare and promotion, to the idea that Sony Ericsson considered having models and actresses to advertise their new handsets in public areas in an effort to build up the road credential of the new mobile line. Such a move was considered sufficient to catch the attention of the interest of the young experts who are the company's main target-individuals whose get older ranged from later 20s to early 30s (Hesseldahl 2002).
What seems to be the challenge, then? The business did all it might to work up adequate publicity and has pressed forward with its plans of making high-end phones that incorporate both fun and functionality for the users. The flaw in Sony Ericsson's strategy is exposed when a deeper study of these target demographic is manufactured: these young pros have managed their spending habits because they are either unemployed or believe they will soon be fired of their current professional position. With such a down-at-luck target market in mind, it is not any surprise why Sony Ericsson's sales have not been picked up a couple of months after their joint venture premiered.
The jv was developed with an obvious and consistent eyesight in mind-that of earning Sony Ericsson the most well-liked innovative brand when it comes to the mobile phone industry (Frendberg 2006), providing the best mix of mobile solutions by means of multimedia cell phones. The joint venture was not regarded as a hostile collaboration as a result of equal income and control showing between the partners. It was the purpose of both Sony and Ericsson to forge organizational synergies between their companies also to end up being the market leader on the market. The equal utilization of their assets was designed to take benefit of each one's belongings, knowledge and possibilities, primarily by offering the most high-tech phones in the market (Frendberg 2006).
The problem will not appear to be the strategy implemented by Sony Ericsson, but rather the timing for his or her launch and the current situation with their target market. The company's fate changed around in 2003 when it commenced to make actual earnings. This also marked a turning point for the business because its work soon paid off and it began to create a revitalized reputation within the mobile handset industry. It had been named the fourth greatest manufacturer of cellular phones, with the business's global market show increasing to 9. 5 percent (Schenker 2008).
The mixture of communication and entertainment has paved just how for Sony Ericsson to be a strong contender again in the global mobile phone software industry (Reardon 2009). As the business continues to create innovative cellular phone solutions before its competitors like Nokia, Sony Ericsson has efficiently captured the young, hip and techie consumer.
This way, the business is able to create more value for their users, something that its competition are also striving to achieve. For instance, the release of Apple's iPhone has incredibly improved the dynamics and the technology that fuelled the cellular phone industry. The business has continued to be steadfast in its commitment to developing feature-rich phones rather than joining its competitors who've chosen to produce smartphones, the newest range of mobile handsets that were more than only a wireless cell phone.
The latest financial downturn within the last one fourth of 2008 in addition has strike Sony Ericsson terribly, breaking its circuit of good profits in the past years. Like its situation in 2002, consumers were especially concerned about the point out of the overall economy and were unwilling to spend more on gizmos, even high-tech telephones like those that Sony Ericsson offered. However, the business continues to bank on its potential to catch the attention of more users because of their ground breaking technology and the unique mixture of features in their cell phones, coining their new strategy 'Entertainment Unlimited. '
Conclusion
This paper has mentioned the development of the Sony Ericsson jv, outlining and inspecting the motivations, weaknesses and alternatives that have influenced its growth in the last nine years. As we've seen throughout the newspaper, the jv became your best option for both companies to adopt good thing about their individual talents. Instead of opting for a limited technological collaboration, a truly joint enterprise between the two was more more suitable since it streamlined their procedures and integrated each one's organizational civilizations. While the company has already established its share of bad business, its strategies of media hype and better technology also have paved just how for the company to achieve the market.
In the long term, Sony Ericsson must rethink its current selection of shying away from the creation of smartphones. If the company wants to anchor its success on constant technological innovations, then smartphones will be the way to go. Not only do they provide entertainment and excellent communication features, nonetheless they also permit the user to do more with their handset such as email, log onto the web and use phrase processor applications, amongst others.
