INSTITUTE FOR INTERNATIONAL MANAGEMENT & TECHNOLOGY, GURGAON

Module Name-Strategic Management Topic: Strategic analysis of SONY and Toyota

SUBMITTED TO:
Mr. Vimal Babu

SUBMITTED BY:
Ravikant Sharma PGPM 2012

Executive Summary
The assignment is about the strategy management of two firms- Sony and AirAsia. The literature review of strategy evolution has been done. The assignment includes the resource analysis and value chain analysis of the two firms. It also includes the strategies followed by the two companies and the key value drivers of these companies. The assignment concludes how these firms have been able to manage these strategies and succeed because of these strategies.

Introduction The recession that started in the late 2007 has a very hard impact on the sales. By the start of 2009 it has been seen that the sales of auto are dropping significantly. And even the price of the petrol and diesel price were moving upward has also hit the sales of automobile. Due to this hike in the price of the fuel every manufacturer were encouraged to produce the hybrid cars and bring it in the market. The Toyota is a multination corporation and worlds largest automaker in terms of net worth, revenue, sales and profit according to fortune global 500. It is incorporated in the year 1937. Toyota is Japans leading manufacturer with over 40% market share in Japan. Postwar Toyota came into the industry and become the leader in the automobile industry. Toyota came into the international market in late 1950s. The first time Toyota imported was in year 1963. Toyota continue to grow in Europes complex and sophisticated market and in 2000 company reached 10 million unit sales to a customer in Germany. Toyota is main and leader in European market and planned to sale 800,000 units and reached it. Toyota is market leader for the customer satisfaction in European countries and has managed to build excellent reputation for reliability and customer service. Toyota has been widely known for its quality production system and products. One of the incredible things is that Toyota is already onto its third generation hybrid engine and even the other manufacturers have not even begun to develop their first (www.toyotabharat.com, 2013). Sony is a multinational conglomerate corporation and worlds largest media conglomerate with revenue of US$72 billion (as of fiscal 2003). Sony was incorporated in the year 1946 Masaru Ibuka and Akio Morita together with small team of passionate committed groups of employees. Its main business operations include Sony corporation (Sony Electronics in the U.S), Sony Pictures Entertainment, Sony Computer Entertainment, Sony BMG Music Entertainment, Sony Ericsson and Sony Financial Holdings. Sony is the market leader in manufacturing of electronics, video, communications, video games consoles and information technology products for different segments of the market. These all things make Sony one of the most wide-ranging entertainment companies in the world. One of the most known brand names in the world today, Sony Corporation, Japan, started its India operations in November 1994, focusing on the sales and marketing of Sony products in the country. That has ensured the superior quality, digital concepts and personalized service that has ensured loyal customer and nation wide acclaim in the industry. Sony is committed to ensuring that both the products and the marketing activities employed truly make a difference to peoples lifestyle and offer them new dimensions of enjoyment. Relentless commitment to quality, continuous dedication to customer satisfaction and unparalleled standards of service is what differentiates us from countless competitors and reflects a true image of all that is Sony.

Literature Review
In the early twentieth century, Henri Fayol proposed the principles of management as planning, organizing, coordination and controlling. Though this model is defined as the functions of

management in a simple but comprehensive way, it seems to lack one element that would direct managers efforts towards the overall corporate goals given the uncertainty in which todays organization operates. Strategy is a term that describes a holistic approach to all the basis facets of the management and business-development processes (Jofre, 2011). Without being strategic, managers, regardless of their managerial level, will lack the understanding of the dynamics of the business environment, overlook opportunities and merely produce results that are aligned with the organizations overall objectives (Freeman, 2010). Strategic management is defined as a set of decisions and action that has result in formulation and implementation of plans designed to achieve a companys objective (Pearce & Robinson, 2009). It includes analyses, decisions and action an organization undertakes in order to create and sustain competitive advantage ( Dess, Lumpin & Eisner, 2009). Because of the continuous changing and uncertain environment in todays business strategic planning has gained popularity in the recent years. The main objective of the strategic planning is to create balance between the external and internal environment. To bring the balance between internal and external environment strategic managers do strategic planning by identifying critical task through a process which is known as the strategic management process. Taking into the future directions on the business is no longer depends on the internal capabilities, managers and the company should closely monitor the external environment and foresee the emerging opportunities and threats (Acure, 2006). During strategic planning, companies collect external and internal data for their strategic planning process. Internal inputs include financial and operational data while external inputs include environment and market forecast. Strategic analyses are fully done through top management meeting in which strategic issue that will have the greatest impact on future business performance (Dye. & Sibony, 2007). The objective here is to help the organizations to work proactive this objective, it requires top management commitment and should actively involved managers and employees at all levels of the organization in order to reflect its dynamic nature. Strategic planning should focus on the overall development of the organization keeping in view of interest of the employees and workers.

Resource Analysis
Resource analysis is the internal part of the company which is the main and integral part of the company. Resource includes the technological, finance, human and other. These are very critical for a company to run the business.

Sony
Sony is one of the leading electronic companies in the market with the help of its internal resources. Threshold of the much anticipated world of total digital convergence, the electronics maker turned media and communication giant seems to have it all- next generation internetaware gadgets and compelling content to pump through them, a vibrant culture of innovation resulting from cutting research and development (R&D) as well as a world-class marketing acumen that has made Sony a global megabrand.

Tangible Resource
Finance Resources: Being a company that is endowed with the reserve, Sony has the necessary financial resources to continue build an extensive international infrastructure that provides its multinational customer with the diversity that is required. This is probably a strategic competitive advantage that any new entrants to the market cannot offer. Sony has cash and cash equivalent equal to 894,576 millions in the year 2013 and 14,206,292 millions in the same year (www.sony.net, 2013). Organisational Resources: With the continuing growth and success, Sony adopted the strategic business unit (SBU) form of the multidivisional structure to implement its related linked diversification strategy, Sonys corporate-level strategy the SBU form consists of 3 levels comprises the corporate headquarters, strategic business units and SBU divisions. Sony is broadly divided into 6 SBUs (electronics, game, music, pictures, finance services and communication network), each further divided into smaller business units, and commonly named as divisions.

Intangible Resource
Technological Resources Sony was first in many areas such as the Trinitron, the Walkman, the Betamax, the Camcorder, the Compact Disc, the MiniDisc, the venerable PlayStation (PS) and the robot dog Aibo. Some of these Sonys technological creations have created new markets of their own. Sony also patents its revolutionary innovations that include the trademark Walkman and video tape beta video format. Innovation Resources (Product Development) Innovation is one of the two central pillars of the Sony establishment marketing is another. This pillar was put in place by the company's founders, who, through their complementary skills and enthusiastic leadership, set the foundations of a true culture of innovation at Sony. So far, through innovation, Sony had produced many revolutionary products that include the first

magnetic tape and tape recorder in 1950; the transistor radio in 1955; and so many others. These innovations had created new markets of their own. Reputation Resources Reputation is one of the significant intangible resources for Sony that differentiates themselves from the competitors for them to charge a premium price for their innovative products and quality. Sony Corporation was proclaimed as the worlds largest consumer-electronics company, a significant player in the media industry and the fastest-growing computer and communication equipment maker. In short, the Sony brand is one of the worlds most recognisable and trusted brands. Given the positive perceptions of Sonys reputation, the brand name is certainly the company's strength.

Human Resource: Sonys official website often stresses that the development and vitality
of Sony's employees drives dynamic growth for Sony. So far, Sony is able to provide comprehensive training programmes worldwide to train its employees to equip them with superior knowledge and skills. In short, Human Resources Management, particularly the ability to motivate and improve productivity of the staffs is certainly Sonys strength.

Toyota
Toyota motors aims at well achieved, constant and long term growth through the terms of high quality vehicles to the global market and also contributing to the fulfillment of realizing the dreams of a developed society. For increasing the companys value they have a flexible and strong business structure. The major strength of the company is that they have a strong position in the international market because they are globally known.

Tangible Resource
Financial resource: Company is one of the leading auto maker in the market. It is financially
very sound and having is 22064.1 billion in year 2013 (www.toyotabharat.com). Plant:Toyota Motor Engineering & Manufacturing (TEMA), headquartered in Erlanger, Kentucky, is responsible for Toyota's engineering design and development, R&D, and manufacturing activities in the U.S., Mexico and Canada. In 13 manufacturing locations across North America.

INTANGIBLE RESOURCES Good brand name: Toyota is the most renowned brand in the international market for the
better customer satisfaction, for better quality of product, and better services. And having goodwill in the market for their product.

Culture of Toyota:
1) Selecting employees for Life 2) People are the heart and soul of the Toyota Way 3) Stopping the line is everyones responsibility 4) Hiring Right person, in the right amount, in the right form at the right time 5) Funnel Model of Recruitment Many prospects lead to few hires

Human Resources:

It includes demographic profile of people in an organization. The

intangible asset of their skills and knowledge is also important. In knowledge based economies people are most valuable asset.

Value Chain analysis

The value chain analysis is used to evaluate the value of every primary and support activity that is added to Sony and Toyota.

SONY
a) In-bound Logistics Sony engages in a series of complex in-bound logistics activities that the company either possesses or provided by 3rd parties. As the company expands, Sony also begin to engage 3rd parties such as Flextronics and Solectron to manufacture some of its product components so that the company will continue to possess sufficient wave length to engage in its core businesses and core competencies.. b) Operations Sonys businesses span across different continents. It production empire alone is spread from Asia to the U.S and to Europe. Generally, Sony has been able to manage its businesses well and hence is able to achieve successes with some of its products. c) Out-bound Logistics Sony is well connected to the distribution networks that every country possesses. In fact, to ensure that Sonys products and services are delivered and reached their destinations on time, Sony has invested heavily to automate parts of the out-bound logistics function to track sales orders, movement of products and payments. d) Marketing and Sales Sony's marketing strategy is to position itself as an innovator and a maker of high quality products which enable it to sell its products at a premium higher than its competitors. To achieve these goals, the companys innovations are commonly backed by massive and zealous marketing efforts which have had helped to create several successful sub-brands such as Trintron, Walkman and WEGA.

e)

Service Sony has established many service related activities that are designed to enhance customer satisfaction that is the feeling that a product or service has met the customer expectation. These activities are mostly carried out at Sony service centers and call-in stations that are manned by friendly and knowledgeable customer service offices.

TOYOTA MOTORS Primary Activities: Inbound Logistics: Here companys suppliers supply the goods and goods are received. And

After that until the production or assembly line needs the goods they are stored.To maximize the availability of raw material Toyota motors maintain good relationship with their suppliers who supply the raw material to the company. Operations: Here goods are manufactured or assembled. Individual operations could include organizing the parts to make new cars & the final tune for a new cars engine. The company Toyota motors are well known for their reliability which has comes from their capable operations. Outbound Logistics: Here the goods are in form of finished or complete and they are needed to be sent to the wholesalers, retailers or the final consumer with the help of supply chain. In different countries Toyota motors manage their own showrooms around the world. Toyota motors make their product assessable. Marketing and Sales: At this stage to meet the needs of the targeted customers Toyota motors prepares themselves. Here company focuses on the communication part and on the promotions mix. Service: here all the areas are included such as final checking, after sale service, complaints handling and so on. Most important thing for the company is that they value their customers and Toyota is company who values their each and every customer. Support Activities: Procurement: For the purchasing of goods, services and materials this step is responsible. For purchase of highest possible quality their aim is to secure at the lowest possible price. For outsourcing (components or operations that would normally be done in house are done by other organizations), and e-purchasing (using web and IT-based technologies to achieve procurement aims) Toyota motors will be responsible Technology Development: For competitive advantage technology is an important resource. For reducing costs and to protect and hold competitive advantage companies need to be innovate. Toyota motors apply production technology, Internet marketing activities, Customer Relationship Management (CRM), and any other technological developments. Human Resource Management (HRM): For any organization employees are a vital resource. Toyota motors manage recruitment and selection, training and development, and rewards and remuneration. They judge their employees as Human Capital.

Maintenance Firm Infrastructure: This activity is driven by strategic planning. For planning and control in different departments Toyota motors applied MIS (Management Information System), and other mechanisms.

Strategic Analysis Toyota: Toyotas strategy is to focus on the development of the new and advance design. It
mainly focused in developing world class hybrid cars. It has very concentrated and highly dedicated employees who are working to develop new and advance technology with the best quality. Toyota is also focusing on expansion plan through joint ventures and acquisition.

Sony: Sony is fully concentrated in developing new technology. It has very well equipped
R&D lab for developing new technology. Sony is also focusing on the expansion of their business through acquisition and joint venture. Key value drivers: Toyota Quality: It is a very important value driver for Toyota because of its high quality products customers loves to buy their products. Delivery: The dealers of the Toyota supply their product at accurate market place at the correct time. Brand/Reputation: As it is a very well known brand in the market there Toyota motors has very good reputation and brand image in the mind of the customers. Breadth of line: Toyota motors has variety of products like cars, trucks, sports automobile, etc. apart from this they also sell genuine Toyota car parts and Toyota oils and chemicals.

Sony
Quality: Sony is good in this because it provide the high quality product through its technological advancement. Delivery: Sony has a very good delivery system in the market and its products are easily available in the market. Brand/Reputation: Sony is a very well renowned brand in the international market for its technology and quality. Breadth of line: Sony inc. has a wide variety of product in the market from entertainment to gaming console, cameras to laptops and etc.

Competitive Analysis

Toyota Motors with ford

For competing with the market leaders such as Ford, Toyota took over the US market with low cost automobiles. Products of Toyota motors are considered to be efficient in comparison to other in terms of fuel and consumption and also on price basis. Toyota is the most innovative auto companies and has a strong culture in comparison to Ford. Ford has always been criticized because of its pollution whereas Toyota has been appreciated for their low environmental pollution motors. Toyota has average cost structure where as Ford has high cost structure which is the weakest point in comparison to Toyota motors. Toyota motors has fuel efficient engines keeping in mind of the problem of high price of petrol and diesel in future whereas Ford do not has fuel efficient engines in their products.

Sony with Apple inc.

For completion Sony has a major competitor in market is Apple. Apple is new in the market comparison to Sony. Sony has been the pioneer in technological advancement and invented many new product like walkman. Whereas Apple is following the footprint of the Sony. Sony has been renowned for its quality product at affordable price whereas Apple provide the new product at premium price.

Lesson learnt
I have learned many lessons from these two companies. I came to know about the different strategies they have adopted to become the leader in the market. This assignment has also taught me what is the value chain and the different value chains the company has adopted. I also came to know about different resources company is having and where they are strong according to their resource. I learned how do they promote their products and what are the techniques they using for the pricing. Sony has known for quality product, as their pricing is also high as compare to their nearest competitor. I also came to know about the competitors of the company and core competencies of the these firms.

References
Sony, (2013). Annual Reoprt, (cited on 07 November 2013) Available from <www.sony.net/SonyInfo/IR/financial/ar/2013/shr/.../AnnualReport_E.pdf> Toyota, (2013), (Cited on 07 November 2013) Available from <http://www.toyotabharat.com/inen/about/history.aspx> Acure, N. (2006). Assessment of strategy formulation: How to ensure quality in process and outcome. International journal of operations & production management, 26(1), 6991. (cited on 27 October 2013) Available from <http://dx.doi.org/10.1108/01443570610637021> Jofre, S. (2011). Strategic Management: The theory and practice of strategy in (business) organizations. DTU Management. New delhi, Tata McGraw-Hill, pp- 230-250. Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press, Cambridge, pp- 330-360. Pearce, J., & Robins, R. (2009). Formulation, implementation and control of competitive strategy (11th ed.). New York, McGraw-Hill/Irwin, pp- 450-480. Dess, G., Lumpkin, G., & Eisner, A. (2007). Strategic management: text and cases (3rd ed.). New York, McGraw-Hill/ Irwin, pp -40-50 Dye, R., & Sibony, O. (2007). How to improve strategic planning. The McKinsy Quarterly, 3, 40-48. Retrieved