Managing Globalization at Sony

Managing planetaryization at SonyExecutive Summary As a consequence of frugalal liberalization, free job is rapidly becoming a reality deep down regional blocks, such(prenominal) as the EU, NAFTA, ASEAN, and Mercosur. Further much, the World Trade Organization is unceasingly reducing the remaining barriers to the free flow of capital of the united States, goods, services, and engineering among countries and regional blocks. The barriers to deal out and investment among countries take place to decline rapidly and argon fashioning b all told-shapedization increasingly more feasible and less expensive. Secondly, technological advances continue their forwards march. There has been a sharp decline in the appeals of venti recent transportation, tele dialogue, and computers since 1950. The decline in transportation costs has radically shrunk the cost of merchant vessels goods across countries. These catchments in information technology feel dramatically cut down the oper ative distance between companies, their customers, and their suppliers and made coordination of far-flung operations non only more feasible but likewise more steady- passage and efficient.Owing to the development of the earth-wide economy, almost of the slosheds argon now expanding their operations across nations. Companies are not only located in their hearth countries, but the harvest-homeion centers, warehouses, distribution centers are also built up in divergent countries as well. This has been d matchless increasingly to reap the benefits of cost and advantageous resources.This explore mainly focuses on certain of the essence(predicate) strategies select by international enterprises. These strategic areas of discussion are strategy for worldwideisation, achieving spheric coordination and operations, building globular RD ne bothrks and improving incarnate governance. The main focus leave be on strategies choose for the mentioned chance on issues by two mul tinationals SONY and SAMSUNG. A qualitative look into of these two companies is undertaken and a comparison of the strategies drawed for divers(a) pigment issues has been made in this paper.1 INTRODUCTION 1.1 Research primer and Motives In its simplest form, strategy is about getting from A to B as cost-in install as possible. Implicit in this process are assessing a smasheds existing situation (A), both out-of-door and internal elucidative strategic objectives (B) and the opportunities they encompass and determining the path bearing of gigantic-term activities (strategies) that most effectively suggestion from A to B. The strategic pathway must reflect not only the changing environment, but also changes called for in a firms capabilities. As such, strategy necessarily combines both internal and external aspects of a firm. When the environment is complex and at times volatile, as is square(a) for the orbiculate economy, these two aspects are continuously in play and f ormative each other(a). Firms vary postulateably in the motivations and paths that guide them toward their global agendas. They bug out at opposite points in their development, pursue different surveys, and operate under different industry conditions. Firms also have a broad prime(a) of the strategic path they take to get with their global agendas. Some firms in the medical, biotech, and computer software fields may be viewed as innate(p) global, because their products have immediate widespread acceptance in an identifi commensurate food market niche around the world. But even then, homogeneous most firms, they must traverse one or more of three broadly different paths to globalize their operations- by dint of growth, extension, or transformation. Thus, it is the foreign entry strategy that decides the mode of expanding fear across nations. The research paper bequeath focus on these strategies as adopted by Sony along with the strategy adopted for global coordination, glo bal RD networks and corporate governance. These strategies of Sony will be compared with those of Samsung to present a contrasting simulacrum between the two companies.1.2 Research Methods The purpose of qualitative research methods is to ensure and explain the actual demarcation phenomenon of operations, and CASE STUDY is one of the most popular methods of conducting such a research. This research is mainly cogitate on two multinational enterprises-SONY and SAMSUNG and the strategies adopted by these firms to enter foreign markets, strategies for attaining coordination in global operations and corporate governance strategies. In fellowship to assure the strategies adopted by these two enterprises is studies. These sources include publications, one-year opuss and public turn of case study companies and a case study provided on globalisation of Sony Corporation. Afterwards, the data and information among these corporations will be compared and analyzed. Finally, the results of the case study will be tested and verified with the literature and certain recommendations for further strategies to be followed will be provided.Certain important c at a timepts will be considered term devising the analysis. These c at one timepts are Multinational Enterprise, Globalization, Corporate Governance and Competitive advantage.The purpose of this research is to explore various strategies adopted while going global and for managing global operations efficiently. The research will aim at discussing and comparing two multinational companies Sony and Samsung on issues relevant to global operations of any organization. The research will also analyze the blow of authoritative economic crisis on the global strategies adopted by companies. magical spell analyzing such impact particular consideration will be given to the views of Rhodes and Stetler provided in an bind get the Advantage in a Downturn, Harvard patronage Review (2009)2 MANAGING A GLOBAL CORPORATION SONY Sony is uniquely characterized with its relatively outgoing nature, flambount exsertership and global mindset of its top executives. The attach to was founded on May 7, 1946, in japan under the name of Tokyo Tsushin Kogyo. In 1958, the bon ton changed its name formally to Sony Corporation. Its major products include Audio, Video, Televisions, Information and Communication, Semiconductors and Electronic Components. Sony was the come toset printing Japanese connection to set up manufacturing facilities in the U.S. In 1980s Sony inflexible to diversify beyond consumer electronic goods and began to move production to other countries. Various strategies adopted by Sony while globalizing its operations are discussed in following topics. 2.1 way out Global In 1980s Japan had an mental picture of a get upr of poor quality goods. When Sony decided to go global the very start-off decision taken by Morita, (then chairman of Sony Corporation) was to change the alliances name from a Japanese name to Sony, which was a combination of a Latin news sonus meaning sound, and a British word sonny meaning, little man.Sony initiated in its global operations in a properly planned way and used Transnational-market strategy to go global. Instead of just starting off the operations in all major countries, the friendship accentuate on shot up operations in one particular region at a time. For globalizing its operations, Sony followed a approach to understand the market and visualise to sell before making any heavy investments.The very first effort towards globalization was setting up of a gross revenue auxiliary in U.S. This was done in 1960 and a decision to set up a manufacturing unit was taken up only in 1971 when the association became well aware of the market trends and consumers choice in U.S. Also Morita decided to stay in America so as to understand the mastermind and consumer behavior of the market. Such a bold decision helped Sony to better indue its prod ucts in U.S. markets.Next market which Sony decided to bung was atomic number 63. In order to be winnerful in European markets, Sony decided to customize its products as per the consumers choice. Sony had to design a Television set that would accept any of the quaternion prevailing standards of Europe. Although, thither was inexpugnable resistance for Sonys designs in European markets, company totally refused to leave its philosophy of being different and not an imitator.In London also company followed the policy of starting with only gross sales office and that too on a comminuted scale. This helped the company to profoundly analyze and understand the market the consumer choice before going for corking investments in the country.In Germany Sonys strategy was to concentrate on projecting an jut of quality. It started selling its product sonly through some best electronic shops and this pee-peed a strong awareness about the products of the company. However, to guard in Ger man markets, Sony move to persist with its expensive, high quality image even after gaining a considerable awareness and flow of orders.Another challenge which Sony faced while globalizing was expanding operations in some(prenominal) Scandinavian countries. Here Sony first official local competing manufacturers, as its agents to enter the market. These manufacturers were those enjoying a good reputation in market and had strong sales capabilities. A worldwide economic ecological niche of 1981-82 acted as a dampener on Sonys sales. At this time a new strategy of setting up strategical Business Units (SBU) was undertaken so as to manage operations on global basis.2.2 Building a Global RD NetworkSony had developed several breakthrough products since its inception in 1946. The company had alship canal followed the strategy of identifying customer needs and developing products to occupy those needs and also which can stand the ever-changing market trends. Sony has several RD labs e stablished in different parts of the world. These labs participate in annual meetings every year so as to set priorities and promote coaction among different regions. The company looked at RD facilities as a means to tap foreign technology, provide technological support to foreign plants and to modify products to campaign the needs of overseas markets. The global RD network is controlled centrally by CTO at the Japanese headquarters of the company and the system represents a Matrix system. The RD offices of US and Europe have CTOs who coordinates their own regional RD activities and formulate regional technology strategies. However, overseas labs are given sufficient autonomy to plan and follow up their projects and local labs are managed by local subsidiary and also by the CTO.Sony aims at non-duplication of research activities across the system and for this company organizes Annual engineering science Exchange Convention where executives from all over the world are able to exc hange information and appreciate companys research capabilities.2.3 Global Coordination Sony used decentralisation and delegation in managing its global operations. The need for a good communication between Japanese headquarters and local tradees was also realized. To foster this Sony emphasized on relating its marketing groups with engineering, manufacturing and other headquarter functions. Also, product divisions were allotted the responsibility of participating in design, promotion and advertising along with distribution and various in operation(p) issues. Sony does have separate business units with independent anxiety committees but all these are linked with headquarters to ensure coordination and cooperation in various functions. on with a fair deal of decentralization of functions Sony established a Strategic Group Headquarters to handle group operations and allocate resources efficiently. Also, in that location is an integration of design, production, customer service and logistics functions of factories to streamline supply chain counsel. with great use of information technology Sony aims at coordinating administrative, sales and marketing operations of Japan, U.S and Europe. The strategy is to provide a wide incline of authority to business units, but with the belongings of the cohesive power of headquarters. The refinement of this strategy is to create an environment of strong leadership of top management and increased corporate worth.2.4 Corporate Governance While designing a corporate governance system at Sony, it was aimed that the ability of gameboard to oversee operations be strengthened. Proper care was taken for delegation of greater authority and responsibility for the extension of business activities and company planned to adopt the Company with Committees system. Such a system comprised of three committees each of which consists of a majority of outside directors. The appointment of outside directors ensures greater soundness , transparency and induce in corporate governance matters. The strategy here is was recognize the richness of a management system that believes in importance of shareholders of the company. The base of such a system of corporate governance is considered to be the innovation of Board of Directors of the company.3 COMPARISON OF SONYS STRATEGIES WITH THAT OF SAMSUNG.Samsung was founded by Lee Byung-Chull as a small trading company in 1938. Today Samsung Group is a multinational conglomerate headquartered in Samsung Town, Seoul, South Korea. The globalization efforts started in Samsung in late 1980s. When Samsung decided to go global the main problem which aroused was companys image of being bargain junk. CEO and management personnel of the company travelled to the US to understand the market and realized that there is a strong need to change this perception about Samsung. Like Sony, Samsung also started with setting up of sales subsidiaries mainly in developed countries but contrast ed Sony, Samsung did not emphasized in tapping one country at a time. Rather Samsung started with its global operations in 1980s with setting up of production facilities in Southeast Asia and Eastern Europe with an aim of gaining the benefits from carrousel trade. Samsung also took the path of mergers and acquisitions to go global during the initial days of globalization. This was not the case with Sony which entered new markets independently to acquire new markets with its existing competencies and image. scorn of a strong resistance for its products design in European markets, Sony refused to compromise on companys corporate philosophy. However in 1990s Samsung did follow th strategies that included manufacturing components for better known global grunges and selling copycat products of microwaves or televisions such as Sanyo to consumers. On the part of Global Coordination, Sony followed a policy of decentralization along with a tight control from headquarters so as to ensur e proper functioning, accountability, transparency, cooperation and increased corporate worth. At Samsung, global operations are managed region wise. U.S market is considered as a amount of money for local marketing and introduction of new technologies whereas Mexico is the base for roundabout export. While Southeast Asia and Europe are the production sites, Japan is the new export market centre for introducing new technologies and China is the second most profound market. All these markets are given adequate authority to perform their one-on-one functions but are closely linked with each other as well as with Global Strategy Control Headquarters in Korea. There is an exchange of technology between US and Mexico where low to median(a) class products are manufactured. Also there is a supply of products from Europe to U.S and of product design and new developments from U.S to Europe. At the same time there is a constant flow of information regarding RD initiatives, and high value- added products from the headquarters to these global business units. Thus, there is a coordination of operations among all the markets which are functional as per their specializations. Sony has set up several RD units in various different countries to absorb the customers expectations from all the markets and convert this information into new innovative products to jibe the needs of each specific market and its customers. Samsung also invested heavily on RD and applied the concept of innovation within the organization. According to Steers, Richard (1997) Innovation for Samsung means, develop through globalization to globalize Samsung. However, Samsung adopted a strategy to invite each and every staff member of the organization capable profuse to innovate. Ungson, Gerardo (1997) explained that a review of Samsungs operations from 1990 to 1992 demonstrated the need to train employees as international experts, to manage difficulties, experienced with foreign local employees, and to recruit clear employees. Company created an atmosphere that can make each employee confident to create innovation. For this Samsung revised the concept of Samsung man that emphasized on the creative item-by-item who is characterized with a wide view and high moral standards. Samsung recruited qualified bulk and there were a third of companys directors aged in 40 years or younger. The company aimed at getting people with good vision about future and considered human capital as the most important element for a successful innovation leading to efficient globalization. On account of corporate Governance, Sony has a clear structure consisting of board of directors which are mainly from external sources of the company. In Samsung there is a cross shareholdings convening representing a web of dubious cross-shareholdings among scholars, bureaucrats and NGOs. Chairman of the company, Lee Kun-hee and his family maintain a control over the group. The Samsung Everland, Samsung Life insur ance, Samsung Electronics and Samsung Card are the main pillars to sustain corporate governance structure and form a ring of shareholdings in the company and exhibit an intricately entangled shareholding system.4 CURRENT stinting CRISIS AND GLOBAL STRATEGIES In the words of Landefeld, J.Steven (2009) Globalization is an economic process that has been going on since the earliest days of trade and investment across regions and countries. It has helped in significantly raising the standards of living, health and improvement in environment through a rise in world-wide production and income. As it is perpetually believed that globalization is largely driven by economic gain a plebeian question during the situations of economic crisis is whether a company should focus on its up-to-the-minute geographies rather than venture into expanding its global operations. In current fiscal crisis it has been seen that markets are good at pricing marginal risks so as to achieve short-term gains. Ho wever, Landefeld (2009) argued that markets are not good in evaluating bubbles and long-term opinionated risk. The current financial crisis definitely affects the global strategies of companies. Most of the companies view the global economic downturn as the biggest challenge partnerships to be dealt with. Also, most of the agencies report that their corporate partners are finding it difficult to initiate new partnerships in current economic crisis. Despite such difficulties the current economic crisis has a positive side-effect also. It provides an opportunity of an extra incentive for finding more and more creative ways of partnerships and global engagements. The crisis also has a positive effect of encouraging innovation. According to Rhodes, D., and Stelter, D., 2009, Seize the Advantage in a Downturn, Harvard Business Review, Inaction is the riskiest response to the uncertainties of an economic crisis. But rash or undiscriminating action can be nearly damaging. In the above m entioned article Rhodes pointed out that a planned approach towards global strategies need to be followed in times of economic crisis. The very first step in this approach is that the company should assess its own vulnerabilities, at the company level and by business unit. Company should be aware of various ways in which the current scenario can affect its business in harm of reduced demand for its products, companys ability to secure short-term financing, effect on cost of capital, etc. Once such affects are known the impact can be quantified to closely assess the exposure. Then it is possible to fixate the ways to reduce the exposure and survive and maximize the companys performance during the downturn. Dr, Suder, Gabriele, prof of International Business at CERAM Business School, France clarifies that while the reduction-of-cost argument is one of the main motivations for internationalization in times of crisis, when it comes to location decisions, decision-makers will always al so opt for convenient labor conditions, market opener effectuate and access to resources not obtainable elsewhere. Therefore, a crisis as we know it immediately is un promising to alter internationalization strategies, and it shouldnt. Simply because this would alter the firms strength. Rhodes explained that a company can capitalize on the opportunities presented by a niche. There is a need to assess and minimize the vulnerability of ones firm. This will position a company to seize future resources of competitive advantage, whether through bold investments in product development or transformative acquisitions. As per the plan suggested by Rhodes, liquidness is considered as the key to survive any economic crisis. A company should monitor and maximize its cash position. This can be done through tightly managing customer credit and aggressively managing working capital. Also, there is a need to optimize ones financial structure by reducing debt and other liabilities and securing ac cess to lines of credit. Further, there is a need to inform investors and analysts about the companys receding preparedness. This will help in maintaining a strong share cost for the company. A company should reduce costs and increase efficiency during economic crisis. This is to be done through rooting out long-standing activities, centralize key functions, and analyze current suppliers and reviving earlier efficiency initiatives to implement them full in better times. Next level is to revitalize customer retention initiatives during recession. There is a need to realign sales force usance and incentives, reallocate marketing spending towards immediate revenue generation, and consider more-generous financial terms for customers. Also, during recession a company should reconsider its product concoction and pricing strategies so as to offer lower-price versions of existing products, considering creative strategies such as result-based or subscription pricing, etc. Naim, Moises (2 009) Globalization cannot be derailed by the world financial crisis until and unless we believe that globalization is mainly about international trade and investment. James (2009) argued that present economic crisis is temporary and globalization will continue and the entire world is tied up due to increase in volume of business. Through a proper mechanism a company can very well expand during recession also. The best companies make an extra effort to not only survive in downturn but position themselves to thrive during subsequent upturn. A company should consider the fact that investments made today in areas such as product development and technology will give good results only once the recession is past. The cost of such initiatives will be lower during recession and will give huge benefits in times of growth. Also, an economic crisis like that of today is good time to invest in human capital also. Downturns can also be viewed as an opportunity to rethink the business models. More and more analysts and practitioners are emphasizing on recognizing the importance of sustainable business practices, super risk-management, long-term performance and ethics. The current economic crisis has lead to recognition of Corporate Social Responsibility in every organization. This crisis has lead companies to pay more attention on environmental, social and governance issues which have a positive effect on companys performance and long-term corporate value. Also, financial investors have learned to consider these key issues while making any investment decisions. Steets, Julia (2009) argued that the global economic crisis will most likely not have a negative impact on business partnerships. In the words of Thomsen, Kristina (2009) While the crisis leads to a reduction of philanthropic giving, it also triggers innovative partnerships and may have a cathartic effect on more conventional ones, eliminating those that would not have been sustainable anyway. Thus, companies adoptin g a comprehensive approach towards handling economic crisis can be better pose and be able to seize the opportunities emerging from the turbulence and will also be able to head start on the competition once the crisis is over.CONCLUSION AND RECOMMENDATIONS From the above discussion it can be concluded that current financial downturn supports the recognition of sustainable business practices for long-term success of an organization and its businesses. At a time when global competition is intensifying, Sony and Samsung, utilise different set of strategies, remain internationally competitive. Sony has continued to supply innovative products all over the world. On the other hand Samsung has emphasized on process enrichment and innovation along with good RD investment. Samsung has concentrated on its marrow squash competency of manufacturing. Despite their different approached towards globalization and various other key issues related with the concept, both Sony and Samsung have succ essfully met the challenges of global competition.Sony has been characterized with an unrelated diversification. Samsung is focused on its core competency of manufacturing but Sony seems to have stuck up in multiple businesses and such unrelated businesses can be more noisome rather than being helpful for the company. It is recommended for Sony to regain focus and investing in enhancing the companys core competencies. Further to survive competition from firms like Samsung and LG, the top management teams at Sony should evaluate the identity of the Sony brand to its customers and adopt a brand oriented leadership. These steps are necessary to rejuvenate Sony in the long run.REFERENCESCaves R.E. (1986), Multinational enterprise and economic analysis, Cambridge University Press, pp.1-30Dunning J.H. (1993), Multinational Enterprises and the Global Economy, Addision-Wesley PublishingLindsay M. (1992), ontogenesis Capital Markets in Eastern Europe-A Business Reference, New York Universit y PressLandefeld, J.Steven (2009), Un High- aim Forum on Globalization and Global Crisis The Role of Official Statistics. United Nations Statistics Division, ECOSOC Chamber.Kim, Samuel S. (2000), Korean Globalization, Cambridge University Press.Parker, Barbara (2005), Introduction to Globalization Business, Sage Publishing.Pak Y.S. and Park Y.R. (2004), Global self-command Strategy of Japanese Multinational Enterprises A Test of Internalization Theory, counselling International Review, Vol.44, No.1, pp.3-21Steers, Richard M Park, Seung-Ho (1997), Korean Enterprise, Harvard Business School Press.WebsitesSamsung Corporation http//www.samsung.com Samsung in Hungary http//www.samsung.com/hu/index.htmSamsung in Russia http//www.samsung.ru/about/Samsung RD expenses in 2003http//www.samsung.com/AboutSAMSUNG/ELECTRONICSGLOBAL/CompanyProfile/InvestmentinRD/Samsungs Governance Remains arguable (2009), Ohmy News http//english.ohmynews.com/articleview/article_view.asp?menu=c10400no=274927 rel_no=1 Accessed 18 November 2009Sony Corporation http//www.sony.net Will globalization be derailed by the world financial crisis? (2009), McKinsey Company http//whatmatters.mckinseydigital.com/the_debate_zone/will-globalization-be-derailed-by-the-world-financial-crisis Accessed 18 November 2009