Critical Thinking Exercise

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Sony Corporation: An International Innovator?

This activity is important because, as a manager, you must be able to understand how businesses can expand revenue and profits by expanding in foreign markets. Successful firms focus on value creation and strategic positioning.

The goal of this exercise is to demonstrate your understanding of international business strategy: value creation, strategic positioning, value chain operations, global expansion opportunities, cost pressures, and choosing a strategy that fits with the core business model of a company in its industry.

Read the case below and answer the questions that follow.

Sony Corporation (sony.com) is one of the most well-known companies in the world. With a heritage from Japan as a multinational conglomerate that was founded in 1946, the company is headquartered in Kōnan, Minato, Tokyo. Sony has annual sales of about 7 trillion Japanese yen (65 billion U.S. dollars), 128,000 employees, and some 100 global subsidiaries and affiliates. The global strategy of Sony has been as an innovator in its industries of electronics, semiconductors, computers, video games, and telecommunications equipment.

Strategically, Sony’s products and services can be classified into 12 core business segments: TV and video, audio, digital camera, professional products and solutions, medical, semiconductors, smartphones and Internet, game and network services, pictures, music, and financial services. To integrate these 12 segments, Sony has a vision of “using our unlimited passion for technology, content, and services to deliver groundbreaking new excitement and entertainment.” The mission is even clearer. Sony is “a company that inspires and fulfills your curiosity.”

This “strategic curiosity” has served Sony well as a global innovator for more than seven decades. For example, in 1960 Sony launched the world’s first direct-view portable transistor TV, and in 1961 developed the world’s first transistor-based videotape recorder. The strategy for the future is through the stunning reality of visuals that can be created by big-screen TVs and dynamic sound, Sony plans to transform the viewing experience from “watching” to “feeling.”

Behind the scenes, Sony has also spent more than 50 years honing its technological excellence in the field of broadcasting and in professional products. The company’s products are widely used in the production of movies and television shows, as well as in live sporting events. This has resulted in a high global market share for Sony and the company received a number of Emmy Awards—one of the most prestigious prizes in the broadcasting industry. Moving forward, Sony is placing a strategic emphasis on providing new value through end-to-end solutions that meet the needs of various customers by incorporating technologies enhanced in the area of content creation.

Beyond the 12 core segments that have served Sony well strategically for a long time, the company is embarking on global initiatives to create new business opportunities. They are accelerating research and development (R&D) activities to bring about innovations that can, if successful, become new strategic business segments serving customers’ needs and wants. To strategically evaluate and nurture potential opportunities, Sony divides these into new business ventures (Life Space UX, Seed Acceleration Program, and Sports Entertainment) and R&D opportunities (Future Lab Program and Sony Computer Science Laboratories Inc.).

On the business venture side, Life Space UX is a concept that is defined by delivering unique experiences and facilitating new ways to transform a person’s living space. The Seed Acceleration Program’s goal is to gather and nurture new business ideas from beyond the boundaries of existing Sony organizations (which is very similar to many organizations’ strategies that are innovatively new). Additionally, with its range of products and services designed to enrich various everyday life situations, Sony is focused on a new business venture of providing discoveries and experiences in sports.

The Future Lab Program is a part of Sony’s heavy investment in R&D. It embraces an approach to technological R&D that emphasizes an open creative environment and direct lines of communication with society, with the end goal being to co-create new lifestyles and customer value. At Sony Computer Science Laboratories Inc.—often abbreviated to Sony CSL—value is assessed based on achievements that can contribute to humanity and society, to new science and technology, to industrial progress, and to product development.

Sources: Anousha Sakoui and Yuji Nakamura, “Sony CEO Heads to Hollywood in Push to Revive Movie Studio,” Bloomberg Businessweek, January 31, 2017; “New Business and R&D,” March 22, 2017, www.sony.net/SonyInfo/CorporateInfo/newbusiness; “Here’s Sony’s New Business Strategy,” The Economist, February 21, 2015; and “Sony Global Corporate Strategy,” June 29, 2016.

Sony has 12 core segments in its business. Is this too many or not enough? Are today’s companies diversified like they used to be a few decades ago? Can Sony’s 12-segment business model be sustainable? (Minimum of 250 words)

The Future Lab Program, which is a part of Sony’s investment in R&D, embraces an approach to technological R&D that emphasizes an open creative environment and direct lines of communication with society, with the end goal being to co-create new lifestyles and customers value. Does Sony create significant customer value? Does Sony create new lifestyles? (Minimum of 250 words)

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