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Sony Company Limited

Business Environment Analysis

1. 0 Introduction

Sony Company Limited is a supplier and distributor of digital cameras and other gadgets in the region. The company has been established in 2005 by its owner The principal competitive features of Sony is its OEM capacity, broad experienced in its research and development section, reliability, large product line and good reputation. The brand of the company is recognized as ECA which is presently exported in major countries like North America, Mid-East/Africa, Asia, Central/South America, and American Europe.

Sony Company Small is an ODM and OEM producer to produce different amounts of electronic devices like digital camera models, MP4 and music player, mobile phone, Gps unit car navigator and digital video camera. The main objective of the company is to provide quality products and services to the global market.

2. 0 Strategic Analysis

The description of the industry above advises its durability in the Malaysia setting up. However, a far more detailed analysis is essential in order to determine the real advantages and possible problems that surround the industry. For this function, various tools will be used to investigate the digital industry of Malaysia.

2. 1 PESTLE

PESTLE examination is in place an audit of your organization's environmental affects with the purpose of using these details to guide tactical decision-making. The assumption is the fact that if the organization can audit its current environment and determine potential changes, it'll be better placed than its opponents to react to changes.

To help to make decisions and to arrange for future incidents, organizations need to understand the wider ˜meso-economic' and ˜macro-economic' surroundings where they operate. (The meso-economic environment is the one where we operate and have limited influence or impact, the macro-environment includes all factors that impact a business but are out of its immediate control).

An organization on its own cannot have an effect on these factors, nor can these factors directly affect the profitability of a business. But by understanding these conditions, it is possible to take the benefit to maximize the opportunities and lessen the risks to the business. Conducting a strategic analysis entails scanning these economic surroundings to discover and understand the wide-ranging, long term movements.

A PESTLE research is a useful tool for understanding the ˜big picture' of the environment in which a business is operating. Specifically a PESTLE examination is a good tool for understanding dangers associated with market (the necessity for a product or service) progress or decline, and therefore the positioning, potential and route for a person business or corporation.

A PESTLE evaluation is often used as a universal 'orientation' tool, learning where an organization or product is in the context of what's taking place outside that will sooner or later affect what is happening inside an firm. The six elements form a framework for reviewing a predicament, and may also be used to examine a technique or position, route of a company, a marketing proposition, or idea.

2. 1. 1 Political

The political facet of the country has less impact to its business sector, or even more specifically, to the electronics industry. THE ESSENTIAL Law of the united states actually protects it from major transitions in legislations in spite of its transfer to Thailand. Through this basic rules, the way of life as well as the capitalist system of the country will remain the same for fifty years since the transfer. Thus, political factors have minimal effects on the consumer electronics industry. The production, export and import of materials for digital camera models will not be affected for the next ten years due to this political agreement. Hence, the production facilities for digital products located in Thailand will not be required to relocate back to Malaysia due to regulative steps. Hence, Malaysia enterprises in the industry can continue steadily to benefit from low priced creation in Thailand.

2. 1. 2 Economic

The current economic climate of Malaysia is highlighted by the position of its international trade. The country is one of the leading trading countries worldwide; hence, it is one of the important aspects of the country's current economic climate. Malaysia market has been favorable to trade and has been successful in balancing its exports and imports. The significance of trade in the country implies the richness of its other related domains such as the electronics industry. It has been evidenced by the high contribution of digitalized products to specific company sales and overall financial development.

The important role of the consumer electronics industry in Malaysia suggests that there are several similar businesses that exist in the united states. Due to high competitors, the companies functioning in this industry are placed under much stress of offering the very best. This also indicates the significance of strategic management among these businesses not and then donate to the economy, but most importantly to maintain strong business basis as well as combat competition.

Assuming that the wealth of the overall economy in Malaysia boosts for another ten years, the consumer electronics/AV equipment industry will continue to improve and find various developments. But of course, economical status is just about the unpredictable areas of a country; hence, the industry must be prepared for future challenges that could arise. These future challenges include economic crisis, price fluctuations and problems on international trade.

2. 1. 3 Social

The societal and ethnic background of the united states is mainly inspired by the Eastern and European influences. This perhaps, is partly due to the status of the united states as a significant middle for business and trade. Although the united states is greatly affected by a number of different cultures, the united states still has its old features intact. While keeping old customs and cultural routines, the country is also available to changes as a result of international influences. This in turn makes the country's culture wealthy and varied. The success of Malaysia's economy is significantly shown in its people' lifestyle. Compared to other Parts of asia, individuals in Malaysia are among those who live with the highest standards. Therefore that the folks of Malaysia have access to a few of the finer things in life, including technology.

2. 1. 4 Technological

Malaysia is a melting container of both European and Eastern backgrounds. The Western and Eastern affects that define the country's socio-cultural history play a significant role to its current scientific status. Considering that Malaysia has immediate access to technological advancements from different countries worldwide, these can be adapted in the united states quite easily. Furthermore, the high expectations of living among the country's citizens imply the power of the visitors to support technology as well as their capacity to apply or put into action them. The contact with technology of both local and international market makes digital products, like camera, a marketable product.

2. 1. 5 Legal

Locally, the political aspect mentioned previously does not seem to be to have an effect on the electronic industry in Malaysia. In international trade, the laws on available trade and free port permit the industry to exports its digital products to international markets. Though the Malaysian industry can send out its digital products freely overseas, the openness of trade as well as the globalization aspect further worsens your competition among similar companies under the same industry. If competition will impact businesses in the industry, chances are for other countries to implement legislations that will control the access of imported products. This may greatly affect the position of the Malaysia industry if this will appear.

2. 1. 6 Environmental

One of the major issues under the environmental aspect that directly influences the industry is probably its location of development building and facilities in Thailand. The expense of labor and land in Thailand, specifically in the province of Bangkok, is significantly cheaper than in Malaysia. Thus, it is more useful to perform the main activities of the gadgets industry in Thailand. However, products made by the AV industry require skills among its work force. Thus, cheaper labor cost may no longer be possible as companies would need to pay larger salaries for skilled and highly informed employees. Moreover, a number of production companies are also relocating to Thailand, thus land costs tend to be higher in comparison before.

3. 0 Rivals Analysis

The creation of digitalized products falls under the consumer electronics company, specifically under the audio-visual equipment category. In Malaysia, your competition in consumer electronics industry is recognized as one of the most vigorous and tough. The making companies of digital camera models and other gadgets in Malaysia are made up of SMEs or small and mid-sized enterprises. The production facilities however of most companies are situated in mainland Thailand. Thus, office buildings in Malaysia focus more on product development, quality assurance and marketing. One of the competition of Sony Company Limited in Malaysia market is the Canon industry and other sectors that offer digital camera models and electronic products all over the world such as JVC, Panasonic while others.

According to the NSTP (2007), digitalization developments paved just how for the industry's significant development which makes it camera and electronic digital industry more experienced. In addition, the company has many competitors since there are many other rivals which provide a variety of digital and gadgets to meet the increasing demands of these products. Players have increased considerably. This business style resulted in the increased earnings produced from high sales of digital products, recommending the strong likelihood of success in the industry. Moreover, revenue from exported digitalized products are high in Hong Kong as well. This then implies that international market firmly facilitates the industry.

4. 0 Porter's 5 Pushes Model

Michael Porter (Harvard, Competitive Strategy 1980) developed the so called 5 Five Causes Analysis model to raised identify factors that condition the type of competition, to assess the structural elegance and business value of any industry and to pinpoint strengths and weaknesses in a corporation.

In addition to and in combination with the SWOT analysis, the Five Causes model by Michael Porter provides another examination tool to recognize opportunities and dangers when joining untapped territory in virtually any industry or market.

Porter's Five Causes model, other than a SWOT examination, provides clear action and thus does not count entirely on subjective view. If the activities that produced from the Five Forces model are synchronized with business requirements and goals it may become a substantial business driver in the competitive environment.

Porters Five Pushes Model is used for analysis of an industry or real competition within market. Chances are the best model to be utilized in decisions of access or change within a market, and should always be considered during the business planning stage in a firm life circuit.

The Porters Five Causes model proposes that an industry is affected by five pushes. An executive may use the model to understand the industry competitive landscaping, to regulate how and where in fact the organization should operate. The model is also used to investigate the appeal of an industry structure.

Porters Five Makes Model is also called Porter's Competitive Causes model, probably one of the most often used business strategy tools. It offers proven its effectiveness on numerous occasions. Porter's model is particularly strong in thinking in a competitive mentality - from external forces to inside the business.

4. 1 Methodology

The strength of every of the five pushes impacting on competition in the chosen industry is usually to be assessed. The company's position set alongside the underlying factors behind each make is also assessed. An idea of action is devised which may includes of positioning the organization to supply the best protection against competitive causes, influencing the balance of the causes through strategic steps and other pro-active procedures and anticipating shifts in the causes and positioning the organization and its own goals and activities accordingly.

Exhibit 4. 1 Michael Porter's Five Forces Model

Sources from:

http://logisticsviewpoints. com/2009/07/31/supplier-risk-management-and-the-automotive-supply-chain/

From the Display 4. 1, Porter points out that we now have five forces that determine industry attractiveness and long-run industry success. These five "competitive forces" includes the threat of admittance of new competitors (new entrants), the threat of substitutes, the bargaining electric power of purchasers, the bargaining electric power of suppliers and the amount of rivalry between existing challengers.

While the Porters Five Makes model in regards to decision making, is to collect, assess and present data for the decision maker, Porter recognizes three generic ways of treat industry rivalry. Strategies can be created on three levels such as corporate, business device and useful or department level. The Strategies are cost leadership, differentiation and competitive benefit. The very best decision will position the solid to leverage strengths and defend against adverse effects of the five makes.

4. 1. 1 Competitive Threat of New Entry

The ratio contribution of the industry to the Malaysian current economic climate suggests the huge number of businesses manufacturing digital products. This then shows that barriers of access for new business entrants are low. New business could easily operate locally; additionally, the Malaysian industry offers multiple product lines under different brand names. Hence, competition is quite strict. Moreover, the majority of the business enterprise in the gadgets industry is known as SMEs, implying that the levels of small businesses or new entrants are high. While using high option of digital production facilities, new entrants could easily start processing and marketing digital products.

4. 1. 2 Competition from Substitute Products

With the climb of technology, different options for device and similar products are very much available. Digital camera models and other products are no exception. At the moment, cell phones are manufactured with camera features, allowing consumers to make use of the phone not only for calling or sending text messages, but also in capturing and holding images. Other video tutorial video cameras have camera features as well; thus, some consumers would like to but an item where all features already are integrated. Web camcorders are also different products for digital camera models. In addition, many of these different products are less costly and more sensible when compared with buying a digital camera alone.

4. 1. 3 Bargaining Power of Customers

Buyers are the people or organizations who create demand within an industry. Customers are also the people who compete with the supplying industry by bargaining down prices and forces higher quality. Customers get access to multiple alternatives for AV equipment and products, thus, the clients have greater control over which item to purchase. The high competitiveness within the industry allowed consumers to get access to lots of options, from brands to types and prices of products.

Thus, consumers have a high bargaining power in the electronics industry. In cases like this, the smaller corporations are greatly influenced. Although consumers have different purchasing actions, generally brand names greatly influences the tastes of buyers. If you will see other available choices, consumers is likely to buy known brands even if indeed they will have to pay extra. On top of that, online shopping through this company website in addition has increased the bargaining power of customers and buyers are more price very sensitive and demand for high quality.

4. 1. 4 Bargaining Power of Suppliers

Suppliers are the businesses that supply materials & other products in to the industry. The expense of items bought from suppliers (e. g. recycleables, components) can have a substantial impact on a company's success. If suppliers have high bargaining ability over a company, then theoretically the business's industry is less attractive. Because of this electric industry, suppliers actually exert vitality in the industry by threatening to go up in prices or even to reduce its quality and moreover powerful suppliers can squeeze industry success if the company is unable to recover the cost increases. In the case of the Malaysian consumer electronics industry, the bargaining power of the suppliers is high. Most of the materials used for producing AV equipment are brought in from suppliers, thus they have higher control over the prices of materials as well as the delivery.

4. 1. 5 Rivalry

The rivalry within the electronics industry will come in two categories. Locally, the primary competition is between your small and large businesses. Major companies in the gadgets industry have stronger brand names and also have greater features of achieving the international market. This is a significant factor as brands in digital products represent the entire quality of that which consumers are after. Major companies also have more resources to market the merchandise through more expensive forms of marketing advertisements. Thus, smaller companies are directly affected. Inside the international level, the rivalry is out there between your Hong Kong companies and the major AV equipment companies of other countries.

5. 0 Evaluation

Based from environmentally friendly and competitive evaluation done for the consumer electronics industry, the results will then be evaluated. In this section, the possible improvements of the industry for another ten years will be looked at. Factors that may affect this improvement, both favorably and adversely, will be cited.

5. 1 Optimistic

Based on the research done, the Sony Company Small will probably succeed and progress in a decade time due to two important factors. One of these factors is the market of the industry. At the neighborhood level, the consumers are very much aware and exposed to highly technological gizmos including the camera. In other overseas marketplaces of the Malaysian industry, such tendency is also visible. In ten years time, technology will continue to grow and introduce high-tech gizmos and products that folks will patronize. Thus, the future development of digitalized products made by Sony Company Small will be backed by the marketplace because of their openness to technology. Additionally, the forex market patronage will in a natural way result to constant profit technology and market growth.

Another factor that will contribute to the success of the Sony Company Small a decade from now is the continuous surge and development of globalization and wide open trade. Through these aspects, Malaysia will have increased market access in another country, resulting in better market and business outcomes. Furthermore, free dock will allow the Sony Company Limited access to more modern technologies that can be useful for manufacturing and marketing digitalized products. This in turn can make the Sony Company Limited more competitive against international brands.

5. 2 Pessimistic

While there are excellent opportunities that the Sony Company Limited may use for future progress, certain road blocks could prevent it from development. For example, the utilization of technology is highly accessible to all or any potential business providers in the industry, increasing the issues on competition, less different products and brands. Furthermore, technological gizmos like digital cameras lose value at a fast rate; thus, chances are that such innovations would lose their value to the marketplace, or worse, this product could be eliminated totally form the industry and become replaced with better substitutes.

Problems throughout the market are also a challenge. Problems in the financial aspect is omnipresent and difficult to anticipate; hence, it is always a problem for those industries and business sectors. Because of these problems, prices for labor, land, production and other business activities could increase, making it problematic for the industry to achieve success.

5. 3 Prediction

Based on business benefits before, the pessimistic situation is the one that is likely to occur in the future. Old electronic digital products like cell phones, cameras and computers for instance, had been easily substituted by digital ones scheduled to fast-phased development in technology.

At present, several companies in the consumer electronics industry are still conducting researches to be able to introduce new technologies that the marketplace demands. In addition, economic problems is a natural incident, though an unstable one. Thus, even without predicting when this may happen in the future, businesses attempt to overcome the consequences of economic problems by setting up themselves in advance.

Although chances are for the optimistic scenario to occur as well, businesses in this industry must concentrate themselves on overcoming the worst scenarios. By preparing in advance, the firms can prevent further problems in the foreseeable future as well as maintain the progress of the industry.

6. 0 RECOMMENDATIONS

In my opinion, this digital industry is still able to make some improvements in order to achieve better income or great success in future. Those improvements includes the next,

1) Diversification

This electronic digital industry (Sony Company Limited) can actually possible to focus more on electronic digital is aware how in the non-consumer business and todays, this industry is very competitive as the competition are able to copy the product in a very short time. Therefore, in order to create much larger income, Sony should focus more on the business sector and market sectors and also more complex equipment as well as the parts. Besides, it could create the strongest advantages if the Research and Development (R&D) section in the corporation able to cut down the purchase price in technology version to match the needs of nowadays market.

2) Cost Cutting

Sony Company Small should take cost clipping into consideration as it is the only way to improve the income. Research and Development (R&D) performs an important role in this as its part in success of this company and it can't be cut though it gobbles up to ten percent of the sales. The products in this company should be refined rather than reinvented to be able to acquire less in create cost and also helps in obtaining the greater automation.

3) Mix of Development, Design and Marketing

There are numerous means of separating the coming up with and growing of a product from the development and marketing even though there is job rotation which the design stage supported by experience alternatively than research and evaluation in nowadays market. Often, this type of concept does not help much in increasing the business enterprise as it generally does not meet up with the consumer needs. Today's, R&D should concentrate more on the consumer needs and innovate predicated on the needs of the market rather than creating new market segments all the while. Besides, the developing team should make the merchandise to fit the existing production design and marketing goals as the developing team is the one who responsible to the earnings and lack of certain product. Therefore, empowering these organizations can create issue but it can bring the useful groups along in reaching the synergy.

7. 0 Conclusion

In spite of the obvious success of the Sony Company Small in Malaysia, certain factors in its environment can cause its possible failure in the a long time. Economic obstacles, competition and differing consumer trends are are just some of the exterior factors that the industry must defeat to be able to ensure future progress. Although these matters may appear inevitable, certain actions could help the industry to achieve success, locally and internationally. Constant product enhancement and development for illustration, can assist in countering fast-paced technology. Doing consumer studies on the other hands can facilitate the task on changing consumer actions. These actions in turn can help in combating business competition and globalization issues.

8. 0 References

Internet References

1. http://technu. nst. com. my/Current_News/techNu/Monday/CoverStory/20081102144739/Article/print_article

2. http://logisticsviewpoints. com/2009/07/31/supplier-risk-management-and-the-automotive-supply-chain/

Books

Aguilar, Francis (2006), Scanning the business enterprise Environment, New York: Macmillan.

2. Armstrong. M. (2006). A handbook of Human being Resource Management Practice (10th ed. ). London: Kogan Site. ISBN 0-7494-4631-5.

PIERCE, C. (2001), The Effective Director: The Essential Guide to Director and Board Development, London: Kogan Page.

Cheverton, Peter. (2004), Key Marketing Skills

Strategies, Tools & Techniques for Marketing Success, Kogan Site, Limited.

Formisano, Roger. (2003), Manager's Guide to Strategy. McGraw-Hill Trade

SIM337 Contemporary Improvements in Business and Management, Version 5. 0, School of Sunderland, United Kingdom

Jones, G. R. & George, J. M. (2003), Modern day Management, McGraw Hill (Third edition)

Worthington, I. and Britton, C. (2003), THE BUSINESS ENTERPRISE Environment, FT Prentice Hall (4th Edition)

Journal Articles

GRUNDY, T. (2006) Rethinking and reinventing Michael Porter's five forces model. Strategic Change. Vol 15, No 5, August. Pg 213-229.

Prepared by : Ting Wan Ping (Jenny)

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