Global Strategy Essay Example
Global Strategy Essay Example

Global Strategy Essay Example

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  • Pages: 10 (2476 words)
  • Published: October 22, 2017
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Global Strategy Introduction Over several decades, there are several forces and rapid change in worldwide businesses which have been driven companies around the world attempting to survive in this uncontrollable changing.

Such factors are tariff reduction, non-tariff barrier, free trade agreement, maturity in domestic market, threat from worldwide competitors and the rise of newly industrializing counties (NICs) such as Thailand, Hong Kong, Taiwan and so on where able to back up for sophisticated manufacturing operations with low labor costs.These examples force worldwide companies to act more and more globally in order to be able to stay in the high competitive level in the rapidly change in global businesses and also to exploit the benefits from globalization. Consequently, many companies have come up with several global strategies. Currently, many worldwide companies being enjoy the benefits through their global strateg

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ies. However, to success in the global markets only good global strategies are not adequate; balancing a degree of using global strategies is also importance.This is because local culture and taste are significant factors which cannot be ignored.

There is undisputed that Japanese companies are good examples for worldwide companies to benchmark the way they doing business globally. Japanese companies always come up with the effective global strategies and eventually can conquer many western markets and also US markets. This report will mainly focus on Sony Corporation which has been successful over several decades to exploit the benefits from globalization.The example of their global strategies and benefits which they have exploited from those strategies will be discussed in this paper. Globalization Definition To success in developing global strategy, understanding the meaning of globalization is a significant requirement for

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every company. The term “globalization” describes the increased mobility of goods, services, labors, technology and capita throughout the world.

Additionally, Raskin (2002) stated that globalization can be defined as the worldwide integration of economic, culture, political, religious, social systems. Moreover, he also stated that globalization is the increasing connectivity of economies and way of life across the world which leads to the convergence of patterns of production and consumption which resulted in homogenization of culture. In term of economies, globalization is the convergence of prices, products, wages, rates of interest and profits towards developed country norms (Ismail, 2003).Moreover, Theodore (1983) supported that globalization of the economy depends on human migration, international trade, movement of capital, integration of financial market, the growing economic interdependence of countries worldwide through increasing volume and variety of cross-boarder transaction, and free international capital flow.

Sony Profile Picture: Tokyo Telecommunications Engineering Corporation Former Company Name: Tokyo Tsushin Kogyo K. K. Tokyo Telecommunications Engineering Corporation), also known as “Totsuko” Company Name: Sony Corporation officially changed in 1958 Founded: in 1946 By Masaru Ibuka and Akio Morita Picture: Masaru Ibuka and Akio Morita, The founders of Sony Corporation Product Name: SONY The First Sony Brand Product: TR-55 transistor radio which had been first introduced globally in US market Picture: TR-55 transistor radio Former Brand: Totsuko Main product: Audio: Home audio, portable audio, etc.Video: Video cameras, digital still cameras, and DVD-Video players/recorders, and Digital- broadcasting receiving systems Televisions: LCD televisions, projection televisions, CRT-based televisions Information and Communications: PC, printer system, broadcast and professional use audio/video/monitors and other professional use equipment Semiconductors: LCD, CCD and other semiconductors Electronic components: Optical pickups, batteries, audio/video/data recording media, and

data recording systems Sony’s Global Strategies “Totsuko” was the former brand name for Tokyo Tsushin Kogyo.However, during 1950, Japanese products had suffered from a public perception of poor quality. So in order to enter international market, Tokyo Tsushin Kogyo was tried to learn from the success of American products.

In 1953, Mr. Morita traveled to U. S. A with the intention to expand his business to U.

S. market and other worldwide markets. Then, Tokyo Tsushin Kogyo acquired the licensing right to the transistor patent from AT&T so finally they can use this technology to develop TR-63 which was the new smallest pocket radio name “Sony” in 1958 and become the first model which can distribute both in Japan and US markets.After that in 1960, The Company can establish Sony Corporation of America and Sony showrooms in New York City. Picture: TR-63, pocket size radio Consequently, the name “Sony” became more familiar than the name “Tokyo Tsushin Kogyo” because it was difficult to understand and to recognize. Finally, in 1958 Tokyo Tsushin Kogyo’s managements have decided to register “Sony Corporation” as its official trademark by an intention to establish “SONY” as an international recognized brand.

This can be considered as Sony first move in doing global strategy. Presently, Sony has become one of the most world recognized brand (Richard A, 2002).Moreover, while many Japanese companies failed to hold out against global competition but through effective global strategies, Sony can be one of nine Japanese companies which can survive under these intensive competition and change. Kikkawa T (1995) stated that there were only nine Japanese firms including Sony, Toyota, Honda, Nippon Steel, Toray, Teijin, Sumitomo Chemical,

Shin-Etsu Chemical, and Matsushita.

He further explained that these companies achieve international competitiveness in two ways which are supplying products globally and/or executing global operation.Sony prior key success factor in executing global strategy is by developing their global strategy from its core strategic advantages which is innovation. From this core advantage, Sony adopted this as their global strategy by continuous supply of innovative product to the global markets. The founder, Masaru Ibuka once remarked that “The key to success for Sony and to everything in business, science and for technology for that matter is never to follow the others”.

Such innovative products are personal headphone stereo “Walkman”, Compact Disk, Video Camera, HD Trinitron, Playstation.All these innovative products were led Sony become more and more recognized not only in Japan and in US market but also in Europe and worldwide. Picture: some Sony innovative products Other global strategies which enable Sony to success in global competition are the choice of location, global marketing, and competitive move. Richard (2002) stated that in term of global expansion Sony actually look at two factors which are operate in market where they believe that was important and where Sony’s products would be most readily accepted.Therefore, the first Sony’s showroom was established in New York City, US where Sony can gain both technology knowledge and market the products and then when they have strong brand name in US it was more easily to be accepted in other market. As a consequent, Sony was able to establish their showroom in Switzerland, UK, Netherlands, France, and many countries worldwide after that.

In term of global marketing, Sony offers the same products in different

countries. This is because their products basically introduced to serve the similar needs of worldwide consumers.Such products as walkman and “playstation” are obvious examples of worldwide popular products. This successful global strategy has derived from the strength of Sony over their competitors in term of anticipating hidden consumer need such as walkman was introduced to serve worldwide people for entertaining during their journey.

These make Sony always move over their competitors at least one step forward. Benefit of Global Strategy As a result of effective global strategies, Sony can exploit several benefits of global strategy.Firstly, Sony can reduce their production cost through economies of scale due to selling product worldwide, so every Sony factory is able to produce at it full capacity. Moreover, even Sony has many product lines but all items are offered at the same patterns worldwide, so variable cost of producing too varieties of item for one product line will be reduced.

Secondly, as a result of global availability, global serviceability, and global recognition enable Sony to be familiar in every country and consumer feel more comfortably deciding to buy Sony’s products.Last but not least, strong offensive strategies through continuous launching innovative products before competitors and CSR program such as “Nationwide Electronics Recycling Program” to encourage consumers to recycle and dispose of electronic devices in an environmentally sound manner, and An outstanding efforts as partner of the Sustainable Energy Europe Campaign by being voluntary commitment to energy efficient and Sony was nominated for its excellent results in maximizing the energy efficiency of its products. These two mains offensive strategies enable Sony to increase their competitive edge over their competitors.Benefits of incorporating CSR

program While enjoying exploit globalization benefit, Sony also realize that their businesses have both direct and indirect impact on the society in which they operate. So, CSR (Corporate Social Responsibility) program have been launched in order to be responsible for all impacts which occurred by their operating. Through CSR program, Sony not only view social as only customers but they will social as a whole or other word, Sony CSR program focuses on the interests of all Sony’s stakeholders.

Sony has attempted to pursue the enhancement of corporate value through innovation and sound business practices.Through innovation, Sony uses their innovative technology to improve their product quality, where as sound business practice require that business decisions have to consider to the interest of Sony’s stakeholders, including shareholders, customers, employee, suppliers, business partners, local communities and other organizations. Sony’ views on Corporate Social Responsibility To illustrate how Sony’s innovation and sound business practice can improve their stakeholders interests, some examples below will enable people to understand more easily.In February 2007, Sony received a Sustainable Energy Europe Award from the European Commission. The award has recognized Sony to their outstanding efforts as partner of the Sustainable Energy Europe Campaign by being voluntary commitment to energy efficient and Sony was nominated for its excellent results in maximizing the energy efficiency of its products. As in 2007, all Sony television has achieved energy consumption below the market average.

Picture: BRAVIA TV LCD: KDL- 40J3000 Consequently, Sony televisions such as KDL-40J3000 and BRAVIA LCD have sold very well in the market.This achievement is derived from Sony innovative technology to produce the low power consumption TV, where in term of sound business

practice their stakeholders are gain a benefits from this CSR program. Customers can enjoy with the high quality TV with more electricity saving, shareholder and business partner such as suppliers and dealer are satisfied by a sales growth of Sony television and national electricity consumption will be reduced as well. Another good example of Sony CSR program is “Promoting Work-Life Balance: Enhancing Child-Care System”.In April 2007, Sony revised its child care leave system with the purpose of improving a work environment more conductive to taking child care leave, also to promote greater participation in child care by fathers, so this resulted in much easier for employees to balance work and home life.

By looking at Sony’ CSR program, this can be considered as one of their strong global strategies. Through this program not only Sony can improve their sales volume by products’ innovation but also they can improve satisfaction on their stakeholders simultaneously.Therefore, through CSR program Sony can exploit the globalization benefit which is the increasing of competitive leverage over their competitors. Drawbacks of Global Strategy Although, global strategy provides several benefits for international companies but on the other hand it also brings drawbacks toward those companies in term of an incurring significant management costs through increased coordination, reporting requirements, and added staff. Moreover, management quality toward individual country can be reduced due to over-centralization which deteriorates local motivation and morale.

Additionally, offering standardized products may lead to dissatisfaction in some countries. Likewise, using the same marketing strategies can result in the reducing of adaptation to local customer behavior and the marketing environment. Lastly, too much using global strategies can also lead to the wasting of

money ad product satisfaction nowhere. Andersen A (2002), support that a lacking of individual market focusing can be a cause of bringing Sony down from a top or market leader.

Moreover, a large investment in R&D to serve global need has led Sony being trapped in too much multiple businesses. Such products as consumer electronics, music label, online music store, semiconductors, a motion picture company, and financial units, these business units have made Sony losing their focus on it core competitive advantage which is electronics product expertise and too much diversification of products cost Sony a lot in term of R&D investment.Furthermore, too much diversification can lead consumer to misperceiving toward the brand as well. Comparing to Samsung, while Sony global strategy is try to launch a multiple types of products to cover as much as possible for all global need. In contrary, Samsung try to avoid an excessive and unrelated diversification and deliver their resources around one or two dominant business only.

Consequently, Sony currently being challenged from Samsung and Sony is started pulled down the top of market by Samsung. ConclusionAs a consequence of rapid change in worldwide business, factors such as technology, communication, labor movement, a emerging of NICs have a big pressure toward worldwide companies to seek for the room to survive. Acting global through global strategies such as offering uniform products and relocated factory are great solutions which international companies can execute for survival purpose. By achieving survival purpose, companies then try executing their global strategies to exploit globalization benefits such as cost reduction, enhancing customer preference, and increasing competitive leverage.However, unbalancing use of global strategy can incur the drawback as

well. For example, increasing in management cost via coordination, reporting requirements, and added staff, reduction in management effectiveness in individual country, and reduction in adaptation toward local customer behavior are the drawback of unbalance global strategy.

Therefore, to be successful in globalization situation, balanced use of global strategy is required for every company.Usually, successful companies find a balance between over-globalizing and under-globalizing; even there are no exact criteria to consider that which market should implement more global strategy and which one should do less but the most important criteria manager should keep in mind is avoiding viewing strategies as global or not global, but instead they should focus on the different dimension strategies, once you offering uniform products to worldwide market but do not forget to keep looking in local need.Reference 1. Ismail. S. 2003 “GLOBAL ECONOMIC INTEGRATION: PROSPECTS AND PROBLEMS”.

Indian Development Review, Vol1, No. 2: p. 163-178 2. Kikkawa, T. 1995 “Growth in cluster of entrepreneurs: The case of Honda Motor and Sony” 3. Raskin, P.

, T. Banuri, G. Ga llopin, P. Gutman, A. Hammond, R. Kates, and R.

Schwartz. 2002 “The Great Transition: The Promise and the Lure of the Times Ahead”, Boston, MA: Tellus Institute. 4.Richard, A. 2002 “The Sony Corporation: A case Study in Transnational Media Management”, The International Journal on Media Management, Vol. 4-No.

2, JMM 5. Theodore, L. 1983 “Globalization of markets”, Harvard Business Review. 6. http://www.

quickmba. com/strategy/global/ 7. http://www. sony. com/recycle 8.

http://www. sony. net/SonyInfo/CorporateInfo/index. html 9.

http://www. sony. net/SonyInfo/Environment/index. html

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