IBU5IBE International Business Group Project Sony Corporation Red Blue Ocean 4/11/2011

Wasonchai Thongnok 16417305 Boriwat Satiratham 17021397 Titibhakorn Suksawadi 16022883 Darin Moungnoom 16356012 Ching-Huei Tung

Table of Contents
Table of Contents...........................................................................................i 1.Executive Summary..................................................................................1 Introduction..................................................................................................2 Literature Review.........................................................................................3 Methodology................................................................................................4 Environmental Factors..................................................................................6 Political Economy......................................................................................6 Financial Considerations..........................................................................10 Legal and Technical.................................................................................15 Social and Ethical....................................................................................21 The Social and Ethical Differences in the Home country and Host country................................................................................................22 Other Social Issues..............................................................................22 Cultureand Languages............................................................................24 Internal Structure and Strategy..................................................................29 Company Information and Internal Structure..........................................29 Customer Services Management.............................................................30 Marketing Strategy..................................................................................32 Marketing strategy...............................................................................33 Market Size..........................................................................................35 Entry Mode and Distribution strategy...................................................35 Human Resource Aspect.........................................................................36 Material Issues...........................................................................................40 Natural Disasters....................................................................................40 Counterfeit Products...............................................................................41 Law Issues..............................................................................................42 Competitors............................................................................................43 Innovations.............................................................................................45
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Social Responsibilities.............................................................................47 Society and community.......................................................................47 The environment..................................................................................48 Supply chain management..................................................................49 Conclusion.................................................................................................50 Bibliography...............................................................................................51

Table of Figures
Figure 1 Prime Minister of Australia, Julia Gillard and Australian Parliament House...........................................................................................................7 Figure 2 Prime Minister of Japan, Yoshihiko Noda, and Japanese Parliament..7 Figure 3 Australia interest rate ..................................................................12 Figure 4 Issues on Sonys customer feedback ............................................20 Figure 5 METI award for The Best Contributors to Product Safety by Japanese Government................................................................................21 Figure 6 Service support page on Sonys website.......................................31 Figure 7 Total numbers of employees in Sony Group .................................37 Figure 8 Board of Management ..................................................................39 Figure 9 The example of the safety approval..............................................42 Figure 10 Electrical Safety Compliance & RCM logo....................................43 Figure 11 C-Tick logo..................................................................................43 Figure 12 Global Electronic Market Share...................................................44 Figure 13 Some examples of the corporate social responsibility programs of Sony Corp..................................................................................................48

Table of Tables
Table 1 The cash flow of Sony in 2010 and 2011........................................11 Table 2 Exchange rate history under Australia currency in US Dollar and Japanese Yen..............................................................................................14
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Table 3 Safety Standard and requirements between Japan and Australia.. .17 Table 4 Plugs and sockets in North America, Japan and Australia...............18 Table 5 Number of inquiries received from customer in 2010.....................31 Table 6 Sonys Repair and Service Locations in 2010..................................32

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1. Executive Summary
Examining the environmental factors, analyzing the internal strategy and identifying the potential risks for Sony Corporation to do business in the foreign country, Australia, is the main purpose for writing this paper. In this paper, we use both qualitative and quantitative methodology to analyze the data collected from various sources, including journal articles, global statistic database, reports, newspapers and the company website, and try to provide a comprehensive foundation for the research. The home country of Sony Corporation, Japan, and the host country, Australia, are very different in terms of many aspects. Although they are both democratic countries, the legal system, economic situation, social and ethical issues various. Moreover, Japanese culture and language are diverse to the ones in Australia; hence, it increases the difficulties for Sony Corporation when entering this western style market. In order to consider about the issues which are not the same as in Japan, Sony Corporation uses diverse strategies in this country. Sony is now a leading company in consuming electronic devices, yet there are some external factors which can have impact on their revenues. For instance, natural disasters, counterfeit products, law issues, competitors etc. Despite the risks in this market, Australia is still a potential and keep growing market, which make it suitable for Sony to extend its worldwide business in long-term. There are few limitations in this report. In the annual report of Sony Corporation, Australia belongs to Asia Pacific region, and cannot retrieve the sales and operating revenue of individual country, thus, we can only estimate from the percentage roughly. Moreover, we cannot access some internal strategies of Sony Corporation through the corporate website and other resources, and which brings some constrains in this report.
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Introduction
Sony Corporation is a famous manufacturing company in Japan which has established in 1946. The company is considered to be one of the leading digital entertainment brands. Sony also engaged in wide range of electronic businesses covering from electronic devices, music business and gaming. It has subsidiaries in many countries around the world such as Australia, USA, Thailand, Germany, and etc. Moreover, Sony has put its commitment on delivering innovative products to customers based on creating new digital experiences for customers [Sony Corporation 2011]. This report will be analyzing on both internal and external factors faced by Sony Corporation in Australia. The focusing issues in external environment are political economic, financial, legal and technical, socio-cultural and ethical factors. Apart from that, the internal factors will cover on the corporate structure and strategy, human resources, and material forces. These factors will show on the opportunities and threats presented to the company. By analyzing all factors, we will be able to evaluate whether Sony has made the right decision on operating in Australia or not. Furthermore, knowing all the possible obstacles would also allow Sony to improve itself and eliminate its weaknesses in order to maintain its position in the market.

Literature Review
EDGE K. 2009 Australias Place in the global economy, Charles Sturt University In todays international trade, it is essential for an involved country to gain access to other countries currencies. Edge examined the position of Australia by looking at the quantitative data of the relationship between Australian dollars and other main currencies including American Dollar, British Pound, and Japanese Yen. He also determined the relative supply and demand of the Australian Dollar with other currencies by looking at the foreign exchange trade volume in the forex market in order to study the movement of funds and the global investment. EUROMONITOR 2011 Euromonitor is an international leader in strategic research for global consumer markets. Their researches focus on industries, countries, companies, and consumer lifestyles in more than 200 categories across 80 countries. In this research, it provides us with the qualitative data on the comparative relation between others and Australian lifestyles we use to determine their consumption behavior towards electronic products. Moreover, its research on countries profiles helps us determining the nature of each country and ability of Sony to cope with the differences of them in terms of culture, politics, legal system, etc. SONY GLOBAL WEBSITE 2011 Sony Global website (Sony.net) is the official website of Sony Corporations. It provides us with both qualitative and quantitative data in terms of facts and strategic planning of the company. In our report, we use both their financial and operational information to analyze the activities of the company. By looking at their provided information, it gives us more understanding about what Sony is trying to do to become the best and largest electronic company which offers high-quality products to customers around the world.

Methodology
We will use quantitative and qualitative method to analyze the data that we collected from various sources. The data covers from the environment factors about the host country of this multinational enterprise, the internal strategy of Sony Corporation, as well as some material issues that we found could influence the business in different ways Different country may have various culture, languages, value systems, religious, political issues and legal systems; thus, it is critical for the MNEs to investigate the country first. In this paper, we mainly use the qualitative methodology in analyzing the environment factors in Chapter 5, trying to figure out the differences between the home country of Sony Corporation, Japan, and the host country, Australia. In Chapter 6 and 7, we use both qualitative and quantitative method to do the analysis about the company itself and the potential external problems, hoping we can outline the better understanding about the current strategy and provide the future strategy for Sony. We gathered the data from many sources, including the corporate website, news, research papers, journal articles, books, as well as the statistics from global databases. Those sources supply different sorts of data. For instance, the statistical figures from the global database helps us know better about the saving and consuming habits of Australian, and the corporate website provides some valuable information such as its supply chain management and marketing strategy. Although we aim to provide good coverage information in this paper, there are some limitations. According to the Sony annual report, we cannot find the financial data of Sony Australia subsidiary, since it combines into the Asia-Pacific region instead of showing as an individual nation. We meet this problem again when investigating other factors as well, such as the human resource and marketing strategy which only targets at Australian market. Though it caused some difficulties when analyzing the company, we tried to estimate the revenue from
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the sales percentage and gather sufficient data from other sources; hopefully it can replace the missing data from Sony Corporation.

Environmental Factors
Political Economy

A Japanese firm named Sony Corporation is an international company which operates the business around the globe. Therefore, political issue and economic issue become significant barriers for Sony. As a result, Sony manages the political factor and economic issue by implementing the flexible strategies which subject to the regulations in various governments [Sony 2011a].

Political Government in Australia and Japan Political government of both Australia and Japan are democratic government: democratic nations. Both countries are constitutional monarchy. However, Australia has a prime minister: Julia Gillard, being a prime minister of the country and Queen Elizabeth 2 is the head of Australia, while HM Emperor Akihito as a head of the country [Euromonitor 2011a]. The political parties of both countries can be discussed following these aspects:

Political Parties inAustralia The party which empowers the Australia is The Australian Labour Party which is a

coalition government: support by an Australian Green Party and three independents. The current prime minister of Australia is Julia Gillard since 2010. There is the Liberal Party of Australia which is the dominant component in election. The election will be arised every three years and there are 150 of the representative members in the Australian parliament. The political system of Australia is considered as a strong federal structure and one of the most stable political countries [Euromonitor 2011a].

Figure 1 Prime Minister of Australia, Julia Gillard and Australian Parliament House

Political Parties in Japan Although, Japan is a constitutional monarchy which has HM Emperor Akihito as a king the

country, the political power to drive the country is managed by the parliament of the country. There are 480 representatives members comprised in the parliament, which are elected every four years. The two major parties competed for the seats in the parliament are Democratic Party (DPJ) and Liberal Democratic Party (LDP) [Euromonitor 2011b]. The latest election was overcome by the Democratic Party (DPJ) which represented Yoshihiko Noda becoming the Prime Minister of Japan in 2011 after 52 years under the control of Liberal Democratic Party (LDP) [Euromonitor 2011b].

Figure 2 Prime Minister of Japan, Yoshihiko Noda, and Japanese Parliament

Due to the politics of both countries are stable, so this leads to less risk on the political issue for international business practices. Japan and Australia have a good relationship for a

long time. Both counties are considered many global issues debating all around the world and also responded to those issues such as global financial crisis, climate change, human right, peacekeeping etc [Australian Bureau of Statistics, 2010]. Japan and Australia are also having a strong relation on two ways trading. Besides, large vase of investment from Japan come into Australia which generates many of employment as well as the benefit of Australia. As a result of the investment, it leads Australia become third largest source of foreign investment of Japan in the stock market: worth $AUS 89.5 billion at the end of 2008 [Australian Bureau of Statistics, 2010]. The obvious Japanese firms that can be seen in Australia are Sony Corporations, Honda, and Ricoh etc. Furthermore, Japan and Australia are negotiated on the bilateral Free trade agreement (FTA) which was commenced in 2007[Australian Bureau of Statistics 2010]. This will result in further relation of both countries growing stronger as well as more opportunities for many businesses of both countries to gain the advantage. Besides, both Australia and Japan support the free market and also support removal barriers in the global market.

Australian Economy Australia is a developed country with a strong economy. It ranks on the 17th of the largest economy of the world. Australian GDP is estimated approximately 1.3 trillion Australian dollars (or around 1.2 U.S. dollars) [Euromornitor, 2011]. The expectation of GDP growth is around 3 percent but it is projected to drop to around 1 percent due to the financial crisis and the natural disasters at the beginning of 2011. However, the Australian economy steadily grows for two decades. As a result of the strong economy, this leads to improving in living standard of Australian residents which surpass G7 countries already except the U.S. [Euromornitor, 2011]. Besides, inflation rate is not an issue in Australia with only around 2.9 percent in 2010. This aspect results in the reflection of strong domestic consumption which supports the

Australian economy as well [Euromornitor, 2011]. Another issue on the Australian economy is the currency against U.S dollar is strong. It accounts for 1.08 Au dollar/ US dollars. This seems to be benefit for imported industries, while the exporting industries would suffer from this crucial exchange rate [Euromornitor, 2011]. Australian economy is a country which bases on the exporting. Due to it has large amount of natural resources. The majority of exported industries are crop industry, meat industry, natural resources industries etc. Australia ranks on the biggest exporter of coal. It is projected about 76 billion US dollars will be invested in 2011, growing from 56 billion US dollars in 2010 [Euromornitor, 2011]. Even though, lacking of human resources and inadequate infrastructure might lead Australia struggled the growth, the federal government have negotiated with partners such as China and Japan to invest in Australia. Foreign Direct Investment is an interesting point at this stage. According to the Austrade, Australian is one of attractive countries for FDI. Approximately 5.8 percents of grow in FDI inflow into Australia in 2009. It is projected around 436 billion Australian dollars of inward FDI in 2010. Top rank countries which investing in Australia are U.S.A., England, and Japan etc. The Agreement with countries is driving Australia forward. There are many countries that Australia is trading with. The two strong trading partnerships: Japan and China are the significant countries which are the opportunity for Australian economy (Japan and China are the largest trading destination of Australia). Vast amount of investments from Japan are likely to improve many facilities and infrastructures in Australia. Moreover, the Asian Market is the most consequent market for Australia in recent year due to the Boom of Asian economy. In 2010 Australia held around 63 percent in the market share of export destination to Asian market [Euromornitor, 2011]. Furthermore, the negotiation on bilateral Free Trade Agreement (FTA) between Japan and Australia were commenced in 2007 [Australian Bureau of Statistics, 2010].

As a result of the agreement, it will decrease the tariff and barriers to nearly or zero. FTA is likely to influence the foreign investment, capital and economy to grow between both countries. This will be a bright opportunity for Australia and Japan. Australian economy is considered becoming one of the most advanced economies in near future. Nevertheless, the global financial crisis and natural disaster seem to be threats for Australian economy. Especially, financial crisis leads the world economy development to the slowdown and impact in many industries all around the globe.

Financial Considerations
According to annual report of Sony [2009], the current asset is around 3,600 million Yen. Sonys current asset declined 28% from 5000 million Yen in 2008. Although the current asset of Sony was dropped, Sony invested in securities investment rose up 16% from 2008. Furthermore, stock holders equity and liability are 12 million Yen, decreased 4 percents from 2008 because Sony borrowed cash in short-term borrowing rose up significantly to 300 million Yen in 2009 from 63 million which increased 5 times from 2008. Sale and operation revenue, the sales profit of Sony was 1,300 million Yen, decreased 13.4% from 2010. The main reason of declining income was a decrease in component sale, mainly of batteries resulting from Earthquake. This was consequence to decrease ability to produce products capacity in 2010. As a result, Sonys manufacturing equipment was damaged, as well as storage media which affected by the damaged of manufacturing equipment. Therefore, the net sale of Sony decreased significantly from previous year. In addition, the operation revenue also dropped significantly from 2010. The operation loss was 1,800 million Yen while the operation income was 36,500 million Yen in 2010. This was mainly from a decrease in gross profit with the lower sale and deterioration in cost of sales [Sony Annual Report 2011].
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The cash flow of Sony excluding the Finance Service segment, there was net cash outflow 115.2 billion Yen, increasing 4.9 billion Yen in 2010. This is a result of a decrease in cash leading to net income after taking into account of amortization, deterioration, and a decrease in accounts payable , notes and trade increasing if compare to the cash flow in previous year. Consequently, the receivables including in other current asset from third-party which are inventories, original equipment and design manufacturing also increase from last year. However, the Finance Service segment of Sony dropped 23.4%. The Finance service had a net cash inflow 84 billion Yen, a decreased of 25.7 billion Yen from last year. This is resulting of decreased in cash led to net income after taking in to account amortization of deferred insurance acquisition cost on revaluation of market securities. 2010 Net cash used in operating activities reported in the consolidated statements of cash flows Net cash used in investing activities reported in the consolidated statements of cash flows

2011

(6.8) (181.8)

2011 (39.9) $ (493) (1,829) (2,322) 1,037 (1,446) 52 $ (1,861)

(148.1) (188.0) 84.0 (117.2) 4.1 (150.7)

(188.6) Less: New cash provided by operating activities 109.8 within the Financial Services segment Less: Net cash used in investing activities within the (115.2) Financial Services segment Eliminations ** 27.4 Cash flow used in operating and investing activities (155.8) combined excluding the Financial Services segments activities
Table 1 The cash flow of Sony in 2010 and 2011 Source: Sony & Information [2011]

Financial activity, Sony spent 148 billion Yen of net cash in investing activity. However, this amount of fund decreased 33.7 billion Yen, or 18.5 percent from 2010 year. For all of Sony segments without Finance Service segment, Sony used 35.5 billion Yen, decreased 10 billion Yen account for decreasing 22.1% in previous year, because Sony decreased fund to invest to develop S-LCD technology. While Sonys Finance Service spent 117.2 billion Yen of net cash,
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increasing of 1.9 billion Yen or 1.7 percent from previous year. This was a result of a declining in proceeds from sales, and the return of investment. As a result, Sony Life increases in payment of investment in advance. According to Sony Financial Holdings [2011], Sony considers one of Management Company to be maintaining stable and appropriate credit rating in order to ensure financial flexibility of liquidity and capital management. Moreover, Sony also has free cash flow to continue adequate access to sufficient funding resources in the financial and capital markets. In 2010, Sony rating is A-Outlook: negative for Long term debt, and A-2 for the Short term debt.

Figure 3 Australia interest rate Source: Trading Economic [2011]

Interest Rate in Australia According to Trading Economic [2011], the interest rate in Australia was 4.75 percent. The interest rate of Australia is controlled by the Reserved Bank of Australias Board. Therefore, the Reserved Bank of Australias relates to make the decision about assessing the interest level. From 1990 to 2010, the average of interest rate in Australia was 5.81 percent, and the highest interest rate appeared in 1990 which was 17.50 in January. However, the lowest interest rate
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appeared in April 2009 which was 3 percent. Figure 5 shows the trade of interest rate in the past 5 years. Interest Rate in Japan According to Trading Economic [2011] the Japanese interest rate did not reach the high level. The Japanese interest was announced at 0 percent, because the Bank of Japan attempt to contribute Japans economic to be stable. Moreover, the Japanese economic expected to recover to an average path, because the effect of the international economic is the consequently of unstable in Japanese interest rate, and demand in Japan related to rebuild after national disaster such as earthquake. In addition, the average interest rate in Japan from 1972 until 2010 was 3.50 percent, and the highest interest rate was appear in December of 1973 which was 9 percent, and the lowest was 0.00 percent in February 1999.

Inflation Rate in Australia The inflation in Australia was announced at 3.5. As a result, the most prices of electronic devices rose up 7.8 percents, accommodation and international holiday travel increasing 5.1 percent. In contrast, the prices of audio, visual and computer equipments declined at 3.3 percent. The average of inflation in Australia from 1937 to 2010 was 6.02 percent, and the highest inflation appeared in March 1975 at 17.60 percent, and the lowest appeared at September of 1997 at -0.03 percent [Trading Economic, 2011]

Inflation Rate in Japan Generally, Trading Economic [2011] stated that the inflation rate in Japan is not high. In quarter three of 2011, the inflation rate was reported in 0.00 percent. This contributed to consumer price index (CDI) in Japan stay in the same level of CDI in 2010. The average inflation rate in Japan since 1971 until 2010 was 2.97 percent, and the highest was 24.90 in
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February of 1974, and the lowest appeared at -2.50 percents in October 2009. Inflation rate usually relates to the standard level of purchasing power or Consumer price index (CDI) in the country.

Exchange Rate exposure According to Edge [2009], the Australia dollar has been fluctuated since Australia floated the currency in December of 1983. Table 2 shows the history exchange rates which are Japan and America under Australia dollar currency. As the table shows that Australia dollar has been fluctuated. For instance, Australia dollar appreciated in value by 13.4 percent in 1993 and 1994, but Australia dollar also depreciated in 1996 and 1998 by 24.7 percent. YEAR ENDING JUNE 1991-1992 1992-1993 1993-1994 1994-1995 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
Source: Edge [2009]

US Dollar 0.75 0.67 0.73 0.71 0.75 0.61 0.66 0.60 0.51 0.66 0.68 0.75 0.74 0.78 0.89

Japanese YEN 94.0 71.5 72.2 60.1 85.2 86.2 79.7 63.2 62.9 79.99 74.82 80.45 85.90 93.21 99.88

Table 2 Exchange rate history under Australia currency in US Dollar and Japanese Yen

From 2000 to 2008, the Australian Dollar was appreciated against US Dollar, because during that time the US Dollar currency depreciated. Therefore, this is a significant factor
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which affected to appreciation of Australia Dollar. Moreover, the goods and services boomed in Australia. This is a consequent to increasing in demand for raw material, and increasing in prices of the export raw material. Furthermore, the Australian Dollar is the most sixth trade world currency and used by currency traders and international investors. As a result, the Australia currency is important to the world economic. For instant, if raw material prices increase internationally, the Australian Dollar also appreciates, because the demand of currency traders and international investors purchase in Australian Dollar. Therefore, any change in exchange rate currencies are important to export and import in Australia. This is effect on the budgets that Australia has to pay when imported to Australian. In conversely, the money when Australia exported relates to the exchange rate as well.

Legal and Technical

Australia and Japan use different legal systems. The law of Australia is based on the common law system from the English model. The most important law is called the Constitution of Australia. All of its states and territories have their own governments, jurisdictions as well as the system of courts and parliaments. In Japan, The law is under the civil law system adapted from the German model [Central Intelligence Agency 2011].

Australian Laws and Requirements According to the Australian law, the importers of electrical devices must strictly follow the required standards and regulations by the Australian authorities. The main requirements were stated in The Electrical Safety Act 1945 and The EMC Framework or Radiocommunications Act 1992. The electrical and electronic products sold in Australia must meet with both requirements [CSA International 2011].

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The Electrical Safety Requirements In Australia, the responsibility of regulating the conformity assessment system for

electrical safety belongs to the state or territory. The Electrical Safety Act 1945 classified electrical devices as declared or non-declared. All declared objects must follow with the Australian electrical safety standards and obtain a certification of approval from the authority. The non-declared devices are not required to be sold with the approval certification but it is the responsibility of the seller, manufacturer, or importer to ensure the product safety [CSA International 2011].

The EMC or Electromagnetic Compatibility requirements The Australian EMC requirements are regulated by The Electromagnetic Compatibility

Framework which states that all electrical and electronic devices sold within Australia that fall into this scope must comply with the required standards and obtain approval from the Australian Communications Authority [CSA International 2011].

Australian Tax and Tariff Regulations Customs and Border Protection calculations In order to import goods to Australia, the company does not need to calculate its own duty and GST liabilities because the Australian tariff authority will make all the correct tariff calculations based on the companys information. After the import declaration is processed, the Customs and Border Protection will give the company with outstanding amounts payable to the government. Tariff rate will be determined by the classification of the companys goods, in this case electronic devices which fall in to the classification number 85, the electrical and electronic objects, with the duty rate payable of 5% of the total value. GST also applies to electronic devices with no exemption so the company will have to pay 10% addition to the total value [Australian Custom and Border Protection Service 2011].
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Safety Standard and Requirements between Japan and Australia As seen from the table below, the safety standard in both countries is different. In order to export its products to Australia, Sony would have to adjust its product quality to meet with the International Electrotechnical Commission standard. The AC supply in both countries is also different as in Japan the electronic devices require only 100 V. while in Australia it would need up to 240 V. The Electromagnetic compatibility requirement in both countries is not so different but it seems stricter in Australia as the qualified products must be declared by the Australian representative. In terms of language on the user manual and label, Sony would also have to make an adjustment or add English into its manual and label so that it meets with the Australian requirements [CSA International 2011].

Japan Safety Standard Japanese standard

Australia IEC (International Electrotechnical Commission) standard 240 V. 50 Hz. Mandatory EMC declaration Must be declared by Australian Representative EMI requirement English

EMC Requirement

100 V. 50/60 Hz. EMI requirements (Electromagnetic Interference)

User Manual language

Source: CSA International [2011]

Japanese

Table 3 Safety Standard and requirements between Japan and Australia.

Plugs and Sockets There are more than 13 different styles of plugs and sockets used by countries around the
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world and the reason is because many countries preferred to have their own system instead of adopting U.S. standard. This issue should be concerned by Sony in order to develop products for different regions. In America and Japan, the style of plugs and sockets are the same but they are different in Australia. So products that are designed with the U.S. standard might be able to be used in Japan without much alteration for the company to make. On the other hand, they would need to be adjusted to meet with the requirements in Australia [Telenet 2011].

Plugs and Sockets used in North America and Japan

Plugs and Sockets used in Australia

Table 4 Plugs and sockets in North America, Japan and Australia. Source: Telenet [2011]

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Quality and Safety Management Sony is one of the leading companies that focus on their products quality management. Recently, Sony just restructured the quality management system in order to improve the quality of both its products and services by developing a new framework based on an ongoing basis. Firstly, The Quality & Safety Committee was appointed among the corporate executives. The committee was tasked with the efforts to improve the overall quality and to ensure that problems will be responded in a timely manner. Quality and Customer Service officers were also appointed to cooperate and coordinate with the worldwide service departments under the supervision of the Quality & Safety committee. Under the new framework, all Sonys products are now created with the unit or regional initiatives that comply with pertinent laws and requirements under ISO-9001 certification for electronic products. Sonys global efforts to improve quality and safety result in many meetings such as quality strategy meetings by the top management to deliberate the decision making process and the quality officer meetings, attended by quality officers in each group to continue on the process [Sony Product Quality Management 2011].

Response to customer feedback Sony takes customer feedbacks very seriously to improve its quality of products and services. Many evaluation mechanism including customer comments, opinions, complaints, and reports of malfunctions are received every day and they are sent from the worldwide customer information centers for the evaluation and improvements at the planning and design groups [Sony Product Quality Management 2011].

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Figure 4 Issues on Sonys customer feedback Source: Sony Product Quality Management [2011]

Software Vulnerability Elimination As the danger of personal information leakage has risen up with the digital networking of electronic products during the last recent years, Sony has developed relationship and cooperation with outside experts and created an internal software vulnerability team for the purpose of protecting customers privacy. In 2009, Sony introduced a mechanism that can detect software vulnerabilities during the security inspection before the product delivery and this process is under a strict control by the quality officers [Sony Product Quality Management 2011].

Responses to Quality Issues One of Sonys most crucial management tasks is to ensure customers satisfaction and trust through the reliability of both the company and the products. Sony seeks to respond to all concerns by a process used to determine the basic policy and timing of public announcement.

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The process starts with data collecting from its worldwide customer service centers and collaborating with concerned departments to make sure that each issue is handed properly and promptly. After identifying the cause of the issues, Sony will implement the appropriate measures with its customers perspective in mind and the same level of service to customers will be provided anywhere in the world [Sony Product Quality Management 2011].

External Recognition In 2009, Sony was awarded with the Director-General for Commerce and Distribution Policy Award in the third METI conference for Best Contributors to Product Safety as the company that manufactures and sells a wide range of electronic products internationally with the ability to provide product safety by promptly responding to safety issues, working to increase awareness and building organizational culture of product safety [Sony Product Quality Management 2011].

Figure 5 METI award for The Best Contributors to Product Safety by Japanese Government

Social and Ethical

Australia is considered as one of the most important economic society, and the large amount of immigrants contributes to its multi-cultural society. Italian, British, Greek, Turkish, Latin Americans, Chinese and Vietnamese immigrants make the society has very different faces compares to other countries around the world. Although it has many immigrants from Asian
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countries, the society is still very different to the Japanese one. It is hard to define Australian society, since there is no single pattern of it. However, due to the multi-cultural society, Australians are more open minded, and willing to know different things [Hill 2011]. This attitude also reflects to their acceptance of the new technology, and which makes Australian a suitable market for a company which is focuses on developing the new consumer technology, such as Sony Corporation.

The Social and Ethical Differences in the Home country and Host country Generally speaking, Australian society and ethical standard are very different to the home country of Sony, Japan. Australian society is more similar to other western countries, where the basic society unit is individual, but not the group in Japan [Hill 2011]. Religiously and ethical system in Australia is Christianity whereas Japanese is based on Buddhism. Although the social and ethical standard varies between the host and home country, it does not have much impact on the Sonys business. In the following parts, we can examine other social phenomena which might influence Sonys strategy in the host country.

Other Social Issues According to the data from Euromonitor International Database [Consumer Lifestyles in Australia 2011], the figure shows that people in Australia have positive attitude toward the inhome technology and portable technology. For instance, there are more than 80% of household has DVD players and CD players, and approximately 74% of household has broadband internet for them to browse online. Sony put many efforts on the in-home consumer electronics such as television, projector, home audio, home video and even home theater system. Although most of Australian families have already owned these media facilities, this product line is still attractive for them. The household penetration of video games consoles in this country is not as high as
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the US (23.5% in 2009) and Japan (29.1%), yet it is around the same level as other western European countries such as Germany, UK and Sweden, the rate is around 17%. The figure indicates that there is still some room for Sony to increase their sales amount on their Sony Play Station video games console in this country. The unemployment rate in Australia is 5.2% in 2010 [CIA Factbook 2011], ranked 50 among 199 countries around the world. It is not as high as the other developed countries such as Germany (7.1%), UK (7.8%), France (9.3%) and the US (9.6%). Nevertheless, compares to previous years, the rate of saving (the percentage of disposable income saved) is gradually increasing. The rate was 7% in 2009, points out that Australians consider saving as more important than before, and will decrease their spending year by year [Consumer Lifestyles in Australia: Saving 2011]. The change of attitude toward money may not benefit Sony and any of its competitors in this nation. Sony is a company which produces various products; except from the televisions, video games consoles, audio and video devices, laptops and digital imaging devices are also their main products. As the development of the technology, people abandon traditional film cameras, and purchase digital ones; people are more likely to care about the display and processing speed of their computers, and the new technology comes with the devices. Computer also changes our living style; it is now a necessary item for everyone in the schools or in the workplaces. Research indicated that the level of education influence the acceptance of the technology; thus, the higher levels of educational attainment, the more likelihood of owning a computer [Divanna 2003]. The statistic data [Eruomonitor 2010] shows that the number of higher educated students in Australia increases year by year, which means the people who has higher education will keep increasing in the future; hence, for the company which provides high technology products and computers, such as Sony, will benefit from the change of the social structure in Australia.

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Cultureand Languages
Consumer Lifestyle in Australia Based on Euromonitor Database, the population of Australia stood at 21.8 million by 2009 and tends to reach 25.3 million by 2020 [Consumer lifestyles in Australia 2011]. Moreover, the birth rate in Australia increased from 12.7 births per resident in 2005 to 13.7 in 2009. Furthermore, there are many factors which encourage the number of birth rate such as the baby bonus by the government, a strong economy and a large number of migrants. Hence, consumer lifestyle of culture can divide by segmentation [Consumer lifestyles in Australia 2011].

Teenagers Euromonitor Database has mentioned that one teen is always talking to his friend about

video games. The teenagers are always doing activities which satisfy their demand and entertainment. It is possible that age in this segment tend to play computer, video games and many activities which release the stress from their study. Thus, as well-known for Sony that it has the greatest technology for electronic games called Sony Play Station, which allows people to play video games and also to play movie or audio DVD, this product may respond to teens demand [Consumer lifestyles in Australia 2011].

20s Due to the fact that age of this segment is the age of study, also many migrants came to

Australia to study their English courses, diploma courses, bachelor degrees and master degrees, and etc. Therefore, students should have notebooks or laptops which are easy to take or handle with them while they are going anywhere. If they want to buy those products, Sonys notebook called VAIO is an alternative choice. Moreover, Sony currently releases tablet, which is
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currently popular in the electronic market. They can be used or searched for information on the internet via wi-fi and wireless [Consumer lifestyles in Australia 2011].

30s The majority leisure activity for 30s Australians are travel and shopping in many cities,

for instance, Bangkok, Singapore, Hong Kong and Shanghai. They may need a portable camera for keep their picture memories. Thus, Sony Cyber-shot digital camera is considered one of the best choices [Consumer lifestyles in Australia 2011].

Middle-age Australian middle-aged Adults are important because they have considerably more

purchasing power. It is possible that they can buy cars, houses, luxury items and consumer electronics. Thus, electronics might be popular items amongst affluent middle-aged consumers [Consumer lifestyles in Australia 2011].

Elderly In addition, older population, which aged over 65 years, is the largest consumer

segmentation. Sony should find a way to response to their needs in order to provide them with their products. Besides, some research referred that the ways which help them to keep their brain active and decreases the early of Alzheimers disease are playing the electronic games or video games and using the computer [Consumer lifestyles in Australia 2011]. Language in Australia For the global economy, language skill is a major advantage of labours. Although Australia is a country where English is the main language which people are using to communicate in daily life. More than 4.1 million people in Australia can speak more than one language.
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Investors in Australia are familiar with the western culture and labours can work well in both Western and Asian environment. Moreover, Australians have skills that can be used in different languages of the Asian region. Hence, language skills and the availability of modern infrastructure can attract the foreign companies. More than 840 companies from the AsiaPacific region now have located or instituted their headquarters in Australia [Kwintessential 2010a].

Consumer lifestyle in Japan The number of population in Japan is the third largest country in the world. There are approximately 127 million people [Consumer lifestyles in Japan 2011]. Japanese population declined from 127.8 million in 2006 to 127.4 million in 2010 by the result of changing social attitudes and the rising living cost. Thus, consumer lifestyle in Japan can be divided as the followings.

Teenagers Japanese teenagers often have their own regular incomes by working both part-time and

full-time jobs, also some from their parents. Therefore, most of them are able to make significant consumer decision without permission from their parents [Consumer lifestyles in Japan 2011].

20s Because of financial independence, demand of expensive items such as cars and housing is

quite high. Also, consumer lifestyle tends to consume expensive products, for example, fashionable clothing, electronic items and leisure [Consumer lifestyles in Japan 2011].

30s
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According to Euromonitor Database, people in their 30s tend to get married and having children. As a result of that, it is possible that the demand of household items and services will be increased. In this segment, demands of consumer are difference with a younger segment. For example, when they want to buy some products, they might consider that the product can satisfy their family, they will not think only about themselves.

Middle-age Middle-aged adults are the largest category, which aged between 40 and 64 years, in Japan.

Therefore, demand in household items and children products will decrease because they most of their children move to their own house. Furthermore, they prepare themselves to getting retirement so they will consider costs of consumption by their total income. Elderly: Older population in Japan tends to spend their leisure time to exercising and walking in hobbies at home. Moreover, traveling to other Asian countries such as Singapore, China, Hong Kong and Taiwan are becoming popular for their activity. However, most of them prefer to stay in urban city more than suburb [Consumer lifestyles in Japan 2011].

Language in Japan Japanese is the official language which is used to communication in Japan, Some foreigners find it quite hard for them to pronounce and understand. As well-known that Japan is the one of many countries which has many manufactures of electronic brand. Companies like Sony and Toshiba, also export their products to countries around the world. However, companies need to use English language to communication with international business, for example, Sony has subsidiary in Australia, most of their staffs speak English since it is their common communication language, they also have interpreter who can speak another languages. It depends on countries that companies invest such as Thailand, India and France [Kwintesstial 2010b].
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28

Internal Structure and Strategy

Company Information and Internal Structure
Sony was established in 1946 by Massaru Ibuka and Akio Morita. These two people complemented each other with a unique blend of product innovation and marketing savvy. Sony has become a popular brand, and has become the global brand in presently. Sony is a global manufacture to produce the electronic devices such as video, audio, entertainment, communication and information technology products for general customer to professional market. The headquarters of Sony electronic is base on Shinagawa, Japan. The Sony Electronic is the largest component of Sony Corporation. The US companies holds Sony Electronic and Sony Entertainment. The operations of Sony which base on San Diego include Research and Development (R&D), engineering, marketing, design, sales and customer service. Sony is a leader company to develop a Blue ray disc, CD, DVD and play a key role of advance technology of audio player. Mission Sony is committed to developing a wide range of innovative products and multimedia services that challenge the way consumer access and enjoy digital entertainment. By ensuring synergy between businesses within the organization, Sony is constantly striving to create exciting new worlds of entertainment that can be experienced on a variety of different products [Sony, 2011]

Vision To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services [Sony, 2011]
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Customer Services Management

With the aim to offer high-quality, reliable, and prompt service to its customers around the world, Sony has developed its own customer relations management system. Sony has appointed its customer service officers to work with customer support operations in its customer service network around the world where the products are sold. The companys executives are also working in charge of assuring product quality and safety in Sonys regional headquarters. The company has established a customer service network to enhance the service quality on a global level where local customers needs are provided with companys tailored service to suit individual issue [Sony Responsiveness and Customer Service 2011].

Training In order to meet with the companys aim to offer high-quality service to its customers, Sony has provided trainings for both its own employees and staffs of the service partners and dealers in relation with customer service to implement common solution to appropriate issue [Sony Responsiveness and Customer Service 2011].

Customer Information Centers The company established the first customer information center in 1963 in Japan in order to response to customers needs or inquiries. Today, the company has located more than 6,500 customer information centers around the world, in hope for prompt and effective responses to customer expectations and satisfactions that reflect customers perspectives and thus enhance Sony with the quality of its customer relation management system. Sony has been receiving thousands of inquiries about products usage and service requests each day as we can see from the table of number of inquiries received from customers in year
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2010 [Sony Responsiveness and Customer Service 2011].

Region Japan North America Europe China and Hong Kong Pan-Asia Latin America
Table 5 Number of inquiries received from customer in 2010 Source: Sony Responsiveness and Customer Service [2011]

Number of inquiries (Telephone, email, letter) 4,560,000 5,010,000 2,560,000 2,840,000 3,730,000 1,470,000

Figure 6 Service support page on Sonys website

Customer Service via internet According to the increasing number of people who use internet to communicate, Sony also uses it to deal with the customer service related issues. Besides the basic information provided on Sonys website, the company adds other information in order to enhance the content such as the offer to download e-manuals about the products and software updates for the customers. Moreover, the company also provides support service to provide easy-to-understand information to the customers. For example, for those who have problem using personal computers for the first time, Sonys service officers are able to provide services while remotely
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monitoring the customers screen via the internet so the problem can be solved quickly and thus increase the quality of the service by increasing customers satisfaction [Sony Responsiveness and Customer Service 2011].

Worldwide Repair and Service Networks Today, Sony has more than 6,500 repair and service networks in six continents around the world. This number includes both Sony service stations and those of authorized dealers or agents. The company is trying to improve its repair and service centers by carefully benchmarking against other leading electronic companies both in Japan and overseas with the goal to enhance the overall customer satisfaction and to provide prompt and efficient services to all the customers.

Region Japan North America Europe China and Hong Kong Pan-Asia Latin America

Number of repair and service centers 920 1,596 1,365 453 2,655 708

Table 6 Sonys Repair and Service Locations in 2010 Source: Sony Responsiveness and Customer Service [2011]

Marketing Strategy
Sony has a well understanding about the comparative advantage. Therefore, they use the comparative advantage to achieve the cost of production (economy of scale) and maximize the profit. Sony has manufactures in over 50 countries such as China, Wales, Hungary, Malaysia, India etc. where the cost of production is lower. These manufactures will produce the products and then distribute to the markets where Sonys distribution and licensed retailers occurred all around the world. Moreover, Sony has its distribution in over 200 countries which are Sonys
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distribution channels and domestic retailers as well. This operation leads Sony to meet the economy of scale and achieve the objective.

Marketing strategy
Sony Corporation is a transnational company which operates various businesses in 200 countries across the world. It becomes one of the largest consumer electronics manufacturers in the globe [Datamornitor, 2011]. It is also recognised as a brand leader on the electronics product and entertainment through the world. Sonys operations expand across electronics product, game, entertainment and financial services [Datamornitor, 2011]. However, the successful of Sony is happened, since the strategies are effective and flexible. Moreover, vision of the firm is believable and reliable which drives Sony forward. There are significant aspects which navigate Sony successfully following below:

Corporate brand identity Sony is one of the biggest brands in the world. The umbrella branding strategy is used to push the target group and population recognition on Sonys Brand. This makes people trust in the Sony which is acknowledged for the quality itself [Datamornitor, 2011]. This is likely to create product acceptance for the population if the company further launch new product under this brand.

Corporate Governance Sony has always kept the corporate governance as their priority and to make it sure Sony adopted Company with Committee as per the companys act of Japan. With that to further purify and make the governance more transparent it has decentralized the board of directors authorizes and segregated it from the other management and committees. The standard of operating is that the directors designate different authorities and responsibilities to the
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executive committee to run the system accordingly and that is the reason that makes the Sonys management more efficient [Sony, 2011a].

Research and development Sony Corporation has spent large amount of investment in the research and development. The investment has been spent to improve the innovative products and the trend of the market. As a result of that, Sony is able to segment the various geographical markets and also minimize risk. Beside, this strategy brings the leader of innovation to Sony which results in gaining the advantage from the innovation and market leader. Sony Corporation still keeps enhancing the research and development to maintain the leader of innovation and leaderof consumer electronic company.

Geographical diversification Sonys global brand message Make Believe and trademark Sony is recognized throughout the world [Datamornitor 2011]. This aspect generates opportunities for the firm to market into global market or new market including Australia. For example, PlayStation Game products exist in 58 countries as well as Sony Pictures Television functions in around 140 countries [Datamornitor 2011].Due to the various geographical operations, the balanced profit mix is created from various diversified geographical markets. This leads Sony contains the largest market geographically more over than the U.S. [Datamornitor 2011]. Moreover, geographical diversification leads Sony to get large amount of customer and also minimize the risk from the single market.

Corporate Social Responsibility

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Sony realizes the impact of the environment. Recently, Sony became a member of the WWF Climate Savers Programme [Sonyinsider 2011]. WWF Climate Savers Programme works together with Sony and commits Sony to respond to the global environment. Therefore, Sony launched the plan named Road to Zero to limit the carbon emission and control the operation to meet the lowest impact on the environment. The further aim is to meet the zero environmental footprints by 2050.

Market Size
The market size of global consumer electronics market is approximately 253.7 billion U.S. dollars in 2009. The growth rate is account for 6.1 percents which dropped from last few years due to the global economy turndown. However, it is estimated to grow and generate 289 billion U.S. dollars by the end of 2014 [Datamonitor, 2010]. Sonys revenues presented 82.5 U.S billion dollars in 2009 which decrease followed the global consumer electrics trend: 12.9 percents compared with the earlier year [Datamonitor, 2010]. However, only the electronic segment in 2009 is account for around 53 billion U.S. dollars in global market [Datamonitor, 2010]. Moreover, in Asian Pacific region, the sale and revenue of Sony operation is projected approximately 17.9 percents of overall global market which is valued 1.7 billion U.S. dollars in 2011, and Australian market is one country located in this region [Sony Annual Report, 2011].

Entry Mode and Distribution strategy

As mentioned, Sony is an international company which functions across 200 countries. Therefore, mode of entry is a factor that Sony cannot avoid. However, good brand image and the benefit of economy of those countries are likely to convenient Sony to operate the business. There are two significant entry modes that obvious occur in the global market including

35

Australia: licensing, international distributer and direct investment. Sony implements manufacturing as mode of entry on the consumer electronics product across the worldincluding Australia. Sony Corporation has its own distributions and manufactures in countries. In Australia, the store is a showroom of Sonys products which is also including services department to serve the customers. Furthermore, Sonys products are available in Australian distributors as well. Licensing is implemented to the domestic retailers. Sonys products distribute through Australian licensed distribution channels covered every states of Australia [Sony, 2011b]. The examples of leading Australian distributors are JB Hi Fi, Altech Computers, Bluechip Infotech, Ingram Micro etc. Besides, Sony did joint venture with Ericsson Company on the communication industry and launches its products under the trademark Sony-Ericsson. Besides, currently Sony Cooperation has taken over Erickson Company becoming a component firm in the communication market.

Human Resource Aspect

Employee Data The total number of the Sonys employees was approximately 168,200 by March 31, 2011. In the Asia-Pacific region which includes Australia, increasing the number of personnel bases result from the amount of expansion of production [Sony Corporation Annual Report 2011].

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Figure 7 Total numbers of employees in Sony Group Source: Sony Corporation Annual Report [2011]

The bar graph shows the total number of employees in the Sony Company from 2003 to 2011. It shows the highest number of employees in 2008, account for 180,500 and dropped to 171,300 in 2009 [Sony Corporation Annual Report 2011]. Comparing with 2011, the number of the Sony employee slightly decreased because of strong competition in the electronic market by Samsung, LG and Toshiba.

Employee-Management Communication In 2005, Howard Stringer, Chairman and Chief Executive Officer of Sony, is using communication closely with their employees to make sure that they understand the company structure which considering on the laws and regulations also respect for the cultures and

37

attitudes in many countries and regions. Moreover, he believes that communicate closely with employees helps the management to understand the perspective of employees and help them to be uniformed by using e-mail and intranet [Sony Annual Report 2011]. The top management of Sony in Asia-pacific always ensures that their employees are familiar with the key issues and management policies.

Human Rights and Equal Opportunities and Diversity Basic Policy In May 2003, the Sony Group Code of Conduct legislated rules which relates to respect for human rights and concerns equal opportunity in employment. It is a policy of recruiting, promoting and training of employees also associated to characteristics which is religion, nationality, skin colour, gender, age or physical limitation. This policy is based on international standards and the United Nations Universal Declaration of Human Rights [Sony Annual Report 2011].

Promoting opportunity for women In 2005, Sony established DIVI@Sony which is a project to promote diversity in company.

It is focusing on gender diversity, especially in women. In earlier year, most of engineering employees in the electronic business are men. For this reason, the company want to encourage an opportunity for women equals men [Sony Annual Report 2011].

Promoting opportunity for individuals with disabilities In 2002 and year later, Sony Corporation gives an opportunity for disabled person to work

at company by establishing two companies which are Hikari and Kibo respectively. Moreover, an implementation between Sony and other companies including educational institution has been created to support disable employees and to improve the capability of those employees.
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After that, they also established more companies in 2009 [Sony Annual Report 2011].

Occupational Health & Safety in Asia Pacific According to Sony Corporate Annual Report, Global Policy on Occupational Health and Safety (OH&S), which is support the health and safety of employees base on responsibility of Sony Company, was established by 1998. In Asia Pacific, training and education to make employee realise the problem of safety is the major of OH&S activities. Furthermore, they created a special team that respond to the potential danger to employee health and safety. In addition, they share some information in the annual meetings [Sony Annual Report 2011].

Board of Management

Figure 8 Board of Management Source: Sony Electronic News and Information - Corporate Information [2010]

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Material Issues
Natural Disasters
Japanese Earthquake and Tsunami In March 2011, Japan was hit by a severe Tsunami as a result of an earthquake on the east of the country. That disaster destroyed 6 main manufacturing facilities of Sony where Blu-ray parts, Li-Ion batteries and optical disks were produced to supply other facilities [Akihabaranews 2011]. According to Sony Corporation, besides those six damaged facilities, operations in other sites within the area had been suspended because of the power outages. In April, eight out of ten manufacturing facilities had resumed or partially resumed the production process. As a result, the company decided to readjust the manufacturing operations at the manufacturing sites that were not directly damaged by the earthquake and the Tsunami in response to planned power outages and the availability of the raw materials. In order to respond to the fluctuations in raw materials and components used in the production process, Sony decided to adjust the production activities in those sites that were not affected by the incident both in Japan and overseas from time to time [Sony News Releases 2011]. Sony will keep continuing to monitor the availability of the raw materials and components in order to maintain supplies of any affected products by relying on existing inventory. The company also plans to take further actions on measuring if it should reallocate any available raw materials and components among Sony group companies by using alternative materials and expanding its purchasing and ordering channels in order to restore full potential on its production capacity as soon as possible. Sony is continuing to research and evaluate the impact of this earthquake including the impact of manufacturing adjustments to make sure that it will be most beneficial for the business and consolidated financial statement of the company [Sony News Releases 2011].
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Counterfeit Products
Currently, consumers may face difficulties in separating between genuine and fake items such as clothes, handbags, software, electronics, watches, pharmaceuticals, company logos and brands. Due to the fact that counterfeit products are made around the world, the consumer must be careful when buying these products. Counterfeit products are imitations that include trademarks, packaging and labeling [Field et al 2008]. Moreover, some firms exploit consumers by selecting low quality raw materials or ingredients to produce their product. The consequences of counterfeit products have many effects on the worlds economy such as suppliers, manufacturers, retailers, and the biggest impact on customers who consume the counterfeit products. Because of the competitiveness of the market and the differentiation of the products, firms compete with each other concerning the design and functionality to serve the consumers needs. There is an increased consumers demand for the high-end products which have unaffordable prices because of the high cost of production. Also, the consumer directly affects the demand of the hi-end product; the counterfeit products are an alternative choice when the consumer possibly cannot effort. Some firms exploit this situation by copying the genuine product and manufacture it with a lower price [Wald 2007]. With increasing demand, the consumers who are attracted to the brand names, can have alternative choices in order to serve their needs at a lower price. For instance, some manufacturers select the materials and ingredients of a poorer quality and use manufacturing processes which are cheap or use non-environmental friendly materials to produce their products. As a result of the counterfeit product, it seems to affect Sony as seen in the drop on sales of Sonys products. Moreover, it has the impact on brand image which the consumer may not be able to be distinguishing between real and fake items. Therefore, they might think that the product is using poor quality; they may not consume that brand in the future. The counterfeit
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products which similar to Sony product are memory sticks, Cyber-shot cameras, VAIO notebook and Handycam camcorder [Evans 2005].

Law Issues
Law issues Legal is one of the consequent factors related directly to transnational firm like Sony. It can be both opportunities and threats. Both legal system of Japan and Australia are different. Therefore, it should be taken into account and risk management is required to crop the risk from legal factor. There are legal categories which can affect the firm operation in Australia such as labor law, patent, trademark. However, both Japanese and Australian laws are strict seriously about aspects of infringement, safety product and labeling system. Before the products will be exported, the Austest Laboratory has to check and test the products to make sure that products are safe to use in Australia [Austest, 2011]. These aspects have been followed by Sony Corporation.

These are the example of the safety approval:

N5071Regulatory Compliance Electrical Safety Type Test Electrical Safety Type Test Mark (RCM)and number mark mark
Figure 9 The example of the safety approval

Alternate electrical safety compliance marks Electrical safety compliance marks will be marked on the products which qualified the quality and safety requirement from the lab. The safety compliance marks below are a part of the regulation of the Australian electrical safety authority regulations [Accesscomms, 2011].
42

Approvals, Permits and Compliance Products which contain Power cords and AC adaptors are required to be checked for the safety purpose. Due to the exported electronic products might use other electric ratio standard [Accesscomms, 2011].

Figure 10 Electrical Safety Compliance & RCM logo

Figure 11 C-Tick logo

Electrical Safety Compliance & RCM (see Figure 10) It is certificated to the qualified electronic appliances safety which is checked with state

electrical safety authority regulations.

C-Tick (see Figure 11) This mark is used to approval the safety electric appliances which use different electrical

power system compared to Australia. It signifies that the electric devices will be safe to use.

Competitors
According to Data Monitor [2010], Figure12 illustrated the electronic consumption trend in 2008 was declining in growth rate, and this trend also consequent to the declining of electronic consumption in 2010. The world electronic consumption market was $253.7 billion in compound annual growth rate account for 6.1 percent in 2005-2009 periods. In comparison of Asia-Pacific, the electronic consumption accounted for 7.2 percent or $64.3 billion. Philip is one of world leaders in electronic industry company. Philip spared over 100 countries across 3
43

continents which are Europe, North America and Asia-Pacific. The total revenue of Philip was $36,689 million in 2008 account for 14 percent of the global electronic consumption. LG is another one leader company in electronic industry. LG operates in many countries across the world such as North American, South American, Europe and Asia. LG comprise of five business segments which are telecommunication, home entertainment, air conditioning, business solution and home appliance. The total revenue of LG was $49,370 million account for 12.9 percent of world electronic consumption. Furthermore, Samsung is the aggressive competitors in this industry. Moreover, Samsung was able to contribute the highest revenue. The total revenue was $108,440 million dollar account for 34.7 percent of global consumption electronic. Samsung operates four business types which are telecommunication, digital media, Liquid Crystal Display (LCD) and semi-conductor. Lastly, the one of largest world electronic group is Sony. Sony runs business in five sectors which are game, picture, finance service and other. The total revenue of Sony was $82,571 million dollars. This is account for 32 percent of the world electronic industry.

Figure 12 Global Electronic Market Share Source: Data Monitor [2010]

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Innovations
Since the first computer has been invented in the early 20th century, our life is changed. As the speed of the processor in the computer is growing rapidly, we can use computers to deal with tasks efficiently and effectively. The processor is not only been used in the computers, it is widely used in digital cameras, televisions, smart phones, and video games consoles. Due to the fast growing needs from customers, companies around the world joined this IT industry, and aimed at providing better and different to others consumer electronics to customers. However, the IT industry is very competitive. For instance, customers always want a good looking and fast laptop with the lowest weight and energy consumption. Few months after, the faster and lighter notebook will be released to the market, and the best product can easily been replaced in a short time. Hence, a firm can only survive with non-stop innovations, thus can keep giving consumers different experience all the time. Bravia is the sub-brand of Sony, which is famous at providing good quality display television. Few years ago, Sony was target at applying plasma technology into its products. However, it is expensive and has some problem on the high electricity consumption and high temperature while operating. People thought liquid crystal display (LCD) is not mature enough to be used on the TV in that time; however, Sony decided to put investment on LCD television and trying to find the solutions for the existing problems on LCD display [Edwards 2006]. Soon, Sony introduced its new LCD Bravia television to the market, and LCD is the main stream technology of the television industry nowadays. Innovation made Sony became the industry leader. However, consistent innovation is necessary. For Sony, television is not just a device for fulfilling the need of watching channels with good quality display. With the innovation, customers can link to the internet and watch Youtube videos, browse webpages or even make a phone call from Skype in Bravia televisions. Giving the new definition to the products and provide customers with different experience is
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the method to differentiate from other products. New trend does not always benefit this company. Sony introduced Walkman, the first portable personal stereo with headphones in 1979, and launched portable CD player in 1984 [Sony Australia 2011] made Sony became the leading supplier of portable music player. The invention of Mini-Disc in the early 1990 from Sony was concentrating on providing high quality portable music solution. However, Sony started to lose its market share after Apple launched its first MP3 player, iPod, in 2001. Apple didnt invent the MP3 player. Nevertheless, Apple replaced the leading position from Sony by providing user friendly, easy-to-use and easy-to-download MP3 player combined with online music store, iTunes [Cooper 2011]. Although Sony Walkman MP3 player still have bigger market share in Japan and some Asian countries [Lambert 2009], Sony might need to change their strategy on the portable digital media player to stop the market loss. The environment changes rapidly, and it is especially true in the technology industry. Three years ago, the light-weighted and smaller size Netbook was once the substitution for traditional laptops, and now the tablet PC becomes a popular portable device since Apple released its tablet, iPad and iPad2. Sony will release its first tablet soon though many of its competitors have already launched several tablets. How to be innovative in a mature market is difficult, and this is the task that all of the companies are facing at the same time. Most of the companies choose to extend their product lines, and trying to maintain their market share [Cooper 2011]. Sony should find some other niche markets or keep researching on other technology to make difference to others; otherwise, it is likely to fall into the cut-throat competition in the end. The impact of technological change on the global market is huge. There are new technologies every year attracting customers with better performance and cooler functions. In order to survive in this competitive market, innovation is essential. Putting new ideas into its products, building strong research and develop team, and keeping updating to the market is the

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only method to satisfy customers need consistently.

Social Responsibilities
Sony, started from a small company in Japan 60 years ago, now is one of the leading suppliers of consumer electronic devices which is dominated the industry in several segmentations. There are many people and factors that involved into the business; the company cannot be success without stakeholders cooperation. In order to reach this goal, the way to manage this relationship is critical. The operating director leads employees to make the profit from doing the business. The board has the right to oversee the performance, determines the mission and the strategy of the company. At the same time, it has the responsibility to address and protect the long-term interests of the stakeholders including customers, suppliers, employees, society, government and shareholders. Sony does many efforts on being a social responsible corporate since knowing that its business will have direct or indirect impact of the society it operate in. Sony first issued the environment issue in 1994. More than a decade after, protecting the environment is not their only mission, this company also cares about the society and the community.

Society and community

Sony Foundation Australia is a non-profit charity organization which is founded by the Sony Group aimed at making the society better through assisting the young kids in Australia and helping them to discover and develop their talent. Sony Foundation Australia has several running programs now. One of them is supporting the young Australians who are fighting with cancer. Cancer is the biggest killer among the Australian teenagers. There are 1,000 young people who have been diagnosed with cancer every year in this country, and more than 3,000 is having treatment now. Considering about the shortage of cancer centers in rural areas, Sony
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Foundation launched some fundraising campaigns as the foundation of building youth cancer centres across this country. More than that, Sony also cares about the drug problems among the young generation. Hence, it helps the young drug users and educating the children in the school about the danger of the drug by broadcasting TV commercials. Caring about the society is one of the missions of Sony. It sets up different corporate social responsibility programs in order to adapt to the local needs in different countries. In Australia, it sponsors some major events to encourage people to enrich their lives and share their passion to others. For instance, Sony sponsors Football Federation Australia (FFA) and The Fdration Internationale de Football Association (FIFA), and holds cultural festivals in Australia.

Figure 13 Some examples of the corporate social responsibility programs of Sony Corp.

The environment
Sony and its suppliers manufacture variety ranges of products and deliver them to consumers around the world. However, greenhouse gases, waste water, and energy consumption are the environment issues during the production procedures. As an ethical corporate, Sony improves their production by reducing the energy consumption, shrinking the packaging size and making the transportation more efficiency, minimizing the waste, recycling the materials which were produced during the production, and using recyclable materials on its products widely. Furthermore, Road to zero is the program that Sony is running right now. It targets at zero environmental footprint in its products life cycle and the business activities in 40 years. As people are paying more attention on protecting the environment, Sony did many
48

efforts on improving their process, and will surely benefiting our children in the future; being an ethical company is not just a slogan for Sony Group.

Supply chain management

Delivering its products to the consumers on time and with good quality is what Sony concerns about. Sony has many suppliers around the world, and some of them locate in developing countries. However, bad working conditions, low wages, long working hours are the common labour issues in those countries. Sony announced Supplier Code of Conduct for its business partners to follow, and ensure they can provide good working conditions, and protect the environment and the human rights at the same time. In order to make sure the supplier factories compliance the Code, audits will be conducted. For the company who has been reported to have violations, the company has to improve it and report the progress back to Sony again. Sweatshops labour is a long-term issue in the developing countries. Sony does not want to have this concern in its supply chain. Although it cannot change the working conditions in these countries in a short time, it can make some influences to the society and change the current situation gradually.

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Conclusion
According to the information that this paper has analyzed, the anticipation on the Australian market seems to be good and potentially grow. The Sonys brand name is recognized through the world, which is likely to gain the advantage from the brands awareness to do the market in Australia. Sonys products are admired about the leader of innovation, quality, design and service. Furthermore, the operation of Sony is very efficient due to the effective strategies of the firm. Moreover, the business environment of Australia is considered favorably for Sony to minimize the external risk, and is likely to meet the objective in Australian market. However, external risk seems to be the significant factor which affects Sonys operation such as global financial crisis, climate change and threats from competitors. Currently, Sony held 32.5 percent in the global market share in 2009. The value of its market share was projected approximately 82.5 U.S billion dollars, which decreased about 12 percent from year 2008. Besides, dropped in stock value seems not to be a good sign for the operation. However, Sony is still stand on the strong position of leader in the electronic appliances. Due to the investment in research and development of Sony, this is likely to be the key player which drives Sony forward.

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