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The Media Conglomeration of Sony Corporation

Paper Type: Free Essay Subject: Business
Wordcount: 3377 words Published: 1st Jan 2015

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It is one of the world’s largest media conglomerates with revenue of $77.20 and 167.900 of employees in FY2010. Sony Corporation headquartered in Minato, Tokyo, Japan. Moreover, it is a company with 1,006 consolidated subsidiaries worldwide.


Sony Corporation is one of the most successful and best-known companies in the world, operating in sphere of electronics and financial service.

The company was founded in May 7, 1946 by Masaru Ibuka and Akio Morita. They established a partnership with a capital equals $500 and called their company as the Tokyo Tsushin Kogyo, or shortly, TTK (Tokyo Telecommunications Engineering Company). However, as European and American markets are interested in the company, they had to change their name. Subsequently, starting from 1958, the whole range of the products of the company was known as the products of Sony.

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In 1950, the first Japanese recorder was developed by Ibuka. Later, the company started production of one of the first transistor radio, after purchasing a patent license from Western Electric for $25.000 in 1953. Further years were very successful and productive. The company produced a variety of products, such as pocket-sized radio, transistor TV, solid-state tape recorder, home video recorder, solid-state condenser microphone, circuit-based radio. 1968 was a new stage of development of the company as introducing the Trinitron color TV tube, Betamax video-cassette recorder (VCR) and the Walkman. In addition, the U-matic VCR was awarded with Emmy for engineering excellence in videotape technology. 1980s were difficult for the company because of a growth of competitors. However, that period of time was also successful as Sony became main producer of Floppy driver disks and computer chips. Furthermore, in partnership with Phillips, the company developed and produced compact disks. Consequently, there are a great number of innovative products introduced by Sony. The most relevant produces were MiniDisc, DVD, Memory Stick, Universal Media Disc, Blu-ray Disc and etc.


Certainly, Sony Corporation could scarcely achieve such amazing results without its productive execution. It is essential to mention that the company always tended to introduce innovative products and technologies. Nowadays Sony goes on playing a particularly crucial role in the world market in different industries, substantially in electronics, where the company’s recent outstanding achievements are particularly significant. Generally, Sony Corporation is a manufacturer operates in spheres, such as consumer electronics, computer hardware and peripherals, printing and imaging industry and banking.


The company headquartered in Minato, Tokyo, Japan. In addition, it has more than 1000 subsidiaries all over the world. The main locations for global enrolment are Atsugi, Japan (Research and Development Centre), New York (Sony Corporation of America), San Diego (Sony Electronic Inc.), San Jose (Semiconductors), Culver City (Sony Picture Entertainment) and etc.

Company size

Patently, Sony Corporation is an excellent instance of a company that has started with only 20 employees and reached indeed incredible outcomes. Nowadays, the company has 67.900 employees throughout the world. Another remarkable fact is the diversification of production that is the company doesn’t focus on one area only, as it could lead to make the company specialized narrowly, however Sony operated in different spheres and industries.

Market share

According to Gamasutra’s data, in 2009 Sony’s share in the gaming market fell dramatically. The company was able to produce $6.4 billion in 2008, by selling products of PlayStation, however its revenue in 2009 was equal $5.1 billion (drop of 20%, or $1.3 billion). Indeed, 2009 year was one the worst years of the company.

Entry 2. Effect of Economic Environment

It is obvious, that economic environment has influence on each segment of business in all countries. Economic factors include economic growth, income level of population, interest rates, exchange rates, fiscal policy and the inflation rate. These factors impact greatly on how businesses operate and make decisions.

Economic growth

To begin with, economy of Japan is highly effectual and competitive in international commerce. Additionally, industrialized and free market economy of Japan is the second-largest in the world. However, the productivity of Japan is far lower in spheres such as agriculture, distribution and services.

The Gross Domestic Product in Japan in the third quarter of 2010 increased at an annual rate of 1.1 percent. Throughout the period of thirty years, starting in 1980, the average quarterly GDP Growth in the country was 0.55 percent. The highest point reached in June of 1990 makes up 3.15 percent that influenced positively upon the majority of companies, including Sony Corporation. On the other hand, negative impact on the company was marked at the period from June of 2008 and dropped at the lowest point of -4.45 percent in March of 2009. Notwithstanding to the fact that economy of the country is quite unsteady, the demand for the products of Sony has always been exceedingly high and go on being very saleable both within and beyond Japan.

Income level of population

An income level of population in Japan relies on the way employment and economic growth operates in economic environment. According to the latest three years’ survey, income level of population faced wild fluctuations, starting with the point of approximately 48% in April 2007 and possessing nearly of 41% in the late September. The lowest statistics was noticed in January 2009, consisting of roughly 27% of the income level whereas the highest point was in the starting line of current research:

The provided survey has a direct impact on the products of the Sony. It evidences that in cases of high level of income of population, the demand for the products of Sony is relatively high whilst in situations of low level of income happens the adverse effect.

Interest Rate

In fact, the last report of interest rate in Japan equals 0.00 percent. The results of interest rates are completed by the Bank of Japan’s Policy Board. During the period of 38 years, starting from 1972, the average interest rate was 3.50 percent reaching the highest 9 percent in December of 1973. As it can be seen from the graph, the interest rate in Japan is quite unstable. Whereas the interest rate expands, the cost of all companies’, as for Sony’s products rises and consequently the purchase rate falls. However, if the interest rate would be equal to zero, the prices will not be changed and the purchase of all products will not change.

Inflation Rate

When inflation in a country where Sony operates is high, the parts from which Sony produces electronics rise in price. Therefore, the company has to increase its expenditures

Fiscal Policy

Japan’s corporate tax rate has been diminishing starting from 1985. Over a period from 1985 to 2008 the corporate tax rate decreased from about 28% to 22%. Sony benefits from the decreasing tax rate as it results in lower expenditure costs for the company.

Entry 3. Effect of Industry Environment

Market sales and number of companies

Sony Corporation is a leading manufacturing company operates in sphere of audio, video, information and communication technology products for the professional and consumer markets. According to the statistics of the fiscal year 2005, more than half of the electronic annual production occurred in Japan, including digital and video cameras, personal computers and laptops, flat panel televisions, semiconductors and other components (batteries and Memory Sticks).

Total market sales of the company for 2010 fiscal year equal approximately $78 billion with the majority of sales in electronics, which involves audio and video equipment, televisions and components, making up 66% of FY2009 Sales. Sales of games come as the second by annual selling with 13%.

Generally, Sony Corporation has businesses in fields of electronics, pictures and music entertainment, games, communications, holdings, assurance, finance, life insurance, marketing and etc. In addition, it is a company with 1006 subsidiaries and affiliates worldwide, including US, Australia, Germany, China, Thailand, Singapore, Korea, Malaysia, Vietnam, France, India, New Zealand, South Africa, Taiwan, United Kingdom, and Indonesia.


Conversely, there are companies operate in the same spheres which are called competitors. Approximately 35 principal companies compete with Sony and operate in the following fields:

Consumer Electronics


Computer Hardware

Computer Peripherals

Computer Displays & Projectors

Printing & Imaging Equipment

Sony Corporation main direct competitors include:

Panasonic Corporation

Royal Philips Electronics

TDK Corporation

Panasonic Corporation

The following company holds 70 percent market share in Plasma Technology in Japan and 40 percent within the world. The corporation major advantages are that it always keeps developing new technologies and products and as result stands as strong company with strong financial position and reputation.

Royal Philips Electronics

Philips Electronics is a worldwide, well-known and diversified corporation. The company mainly, directs in manufacturing and developing lighting products, medical systems and consumer electronics. Strong financial position, brand, innovative products and technologies are making it one of the strongest companies in sphere of lighting before General Electric.

Entry 4. Effect of Political and Legal Environment

Obviously, all set of laws and regulation are observed by all subdivisions and subsidiaries, of the countries where they function in and conduct businesses in a fair and ethical way. Certainly, all staff has to comply with all related laws and regulations, including interior rules of the company. In addition, they are answerable for realizing and being acquainted with both legal and internal requirements by working within the corporation.

Government regulations

Sony’s commerce activities are exposing to a range of governmental regulations in the countries in which it operates. Generally, the following regulations relate to business approvals, import and export control, customs, competition, advertising, intellectual property, business and customer taxation, foreign exchange controls, product safety, personal information protection, labor and environmental requirements.

Additionally, all insurance businesses of Sony in Japan are subject to the Insurance Business Art (IBA) and under control of the Financial Service Agency. The main function of the IBA and related regulations is to guard policyholders.

Labor market

Sony Corporation assigned a policy of hiring, guiding, supporting and treating employees and candidates without any sort of discrimination founded on their gender, race, age, color, religion, disability and other factors, which are not related to the legal business benefits of the company.

In addition, it is not acceptable for the company to make use of any sort of enforced or unintentional labor, such as child labor.


According to the policy of Sony Corporation, the company goes on searching for the solutions in order to diminish the environmental impact of company’s products and services. In order to implement the following policy, Sony Group will attempt to assess and carry out programs, which meet the legal requirements.

Competition legislation

Sony is a powerful competitor in each its major product line throughout the globe. In fact, all subsidiaries in a country where Sony Corporation conducts business have to comply with all regulations and laws. According to the Antimonopoly Act, Japanese competition law against private monopolization, irrational restraints of trade and unfair manners of competition.

Consumer legislation

In Japan, a range of laws have been enacted in order to protect the consumer with the purpose of preventing consumers from being damaged or for providing instant relief if they are damaged. According to Sony, the company has won the consumers’ confidence, as people trust the company for products’ quality, price and durability.

Entry 5. Effect of Socio-cultural environment

Japan is one of the most highly developed countries in the world. The society and culture of this country are crucial and play an irreplaceable role in its development. Japan’s society and culture have advanced from the time of feudal lords. Nevertheless, some traces of that still can be seen in Japanese business. Indeed, the lowest birth rate is marked in Japan. In consequence, in the future it could lead to labor deficiency and impact harmfully on development of Sony.

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Actually, the values, beliefs, opinions, and lifestyles of society make up the social factors that affect a company. In addition, demographic factors such as population, religious composition, age distribution, literacy levels, rural, urban mobility, income distribution, and etc, can influence on a company’s plans considerably. In fact, the literacy rate of Japan is very high as 99 percent of the Japanese population has a high school education. Definitely, 87.5 million people among approximately 128 million are good in using Internet and, obviously, computers. Certainly, it is an excellent fact as Sony is one of the main manufacturers of electronics in Japan.

Actually, one of the most important factors which affect the business environment in Japan is the enormous population occupying a very limited area. As a result, in most Japanese offices, space is not broken down into individual rooms as compared with Europe and United States.

An example of cultural threat might be language. Japanese is the official language of Japan. In spite of the significance of Japan within the worldwide economy, somewhat a small number of non-Japanese speak the language. Possibly, there are reasons have led to this linguistic isolation. First of all, Japanese as a language is limited to only one country in comparison with such multinational languages as English, Spanish, or Arabic. Secondly, Japanese has no exact connections to any other linguistic family. Finally, Japanese writing is significantly more difficult than most other languages. Traditional Japanese is written in vertical columns that read from right to left. As a result, Japanese is not easy to understand and learn.

In general, companies have to study the socio-cultural environment of a country comprehensively in order to avoid costly faults. The main advice for the company is to be more multinational, in other words, to adapt in many counties as possible, especially in Central Asia.

Entry 6. Effect of Ethical Environment

In fact, company’s stakeholders are people who have an interest in a company, in other words, people who are interested in pecuniary and other results of the business. In addition, there are people within and beyond the corporation who have their own interests. Moreover, the stakeholders are divided into internal and external.

Generally, the prosperity of each company depends on ethical decisions. Furthermore, according to the Ethical Personal Conduct of Sony, it is illegal and criminal sanctions in various countries to trade stocks or securities of the company, whilst having non-public material about the corporation. In order to avoid information leakage and other unethical decisions all staff has to be familiar and comply with internal policies and regulations.

All business decisions and activities must be made and conducted in the best interests of the company. In addition, all personnel are not allowed to have any business or financial relations with competitors, suppliers, customers, that might diminish, or even appear to decrease, the independence of any judgment they may need to make in the best interests of Sony Group.

In order to avoid loss, damage, misuse, theft or even sabotage of Sony’s Corporation’s assets all personnel have a duty to protect them. These assets are both tangible and intangible and include brand, technology, and trademark, confidential and proprietary information.

Additionally, Sony business activities are monitored by media, for instance, Internet media and security analyst, newspapers, magazines, radio and television. For providing accurate and clear information to the public, it is crucial that comments to the press be made only by nominated spokespersons.

One of the core responsibilities of Sony to the society is to earn consumers’ confidence through innovative products. As an example of social responsibility could be employees. Being internal stakeholders of the company, employees are offered flexible working styles that provide employees with fully expressing their abilities, for instance. Moreover, Sony appreciates communication between management and employees and encourages them for their opinions. Furthermore, Sony does its best to make the workplaces where individual rights are respected and equal employment occasions to make the most of their competences.

Entry 7. Effect of Technological Environment

To begin with, Sony is one of the most innovative companies, which always carry on producing and developing brand new products. As it can be seen, an effect of technological environment plays irreplaceable role in company’s evolvement as it received high appreciation and good reputation from consumers with the help of science and technology.

An excellent evidence of this could be the victory of the 55th Okochi Memorial Award (March, 2009) for the world’s first OLED television. The award was given to Tetsuo Urabe (Display Device Development group) and three others by Urabe and its colleagues for success in development and mass-production of TV’s.

Another instance of high level of development is the Blu-Ray Disc â„¢ format, which is used by million customers worldwide, was honored with 62nd annual Emmy Award for technology and engineering progress. In fact, of June 2009, more than 2500 Blu-ray Disc titles were available in the United States and Canada, with 1500 in the United Kingdom and Australia. More than 3300 titles were published in July of 2010 in Japan.

Notwithstanding to the fact that it was not rapid to initiate an online service for the PlayStation 3, Sony Corporation recently patented the technology which would allow consumers not only watch movies, but also interact with them at the moment of watching videos and other media. The mixture of this technology announced as PlayStation 3 Netflix integration, could give a competitive advantage to Sony in excess of its two main competitors in gaming industry, Nintendo and Microsoft.

Besides, Sony developed the most powerful bio battery sample in the world, based on sugar. According to Sony, as glucose is a renewable energy resource, copiously existing on earth, batteries that utilize it as a power source should be friendly for the environment. Interestingly, Sony is going to develop electrode construction, immobilization systems and other technologies in order to advance the battery’s performance and working time.

Nevertheless, Sony Corporation is one of the leading companies in almost all spheres where the corporation conducts; it should monitor and be aware of competitors’ products development. Furthermore, Sony has to develop more areas of business, such as lighting, home appliances etc, as its main competitors go on enveloping new industries.


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