AIR UNIVERSITY MBA 2 TERM PROJECT

SONY ERICSSON JOINT VENTURE

Proposal Report
Zainab Ali Syed Zeeshan Hassan Sabeen Fatima Samia Khalid

22nd February, 2011

Table of Contents
Case Analysis Objectives............................................................................................2 Research Methodology...............................................................................................3 Project Timeline........................................................................................4 References..................................................................................................................5

CASE ANALYSIS OBJECTIVES

This case analysis being carried out as our term project involves analysis of a case study relevant to the course Global Corporate Strategy. The case encompasses the joint venture carried out between two international corporations Sony and Ericsson. The analysis involves the reasons behind their merger, the resulting decline in profits and sales and a revival in both and the market share. Below is a brief introduction to both Sony and Ericsson. SONY: The Sony Corporation is headquartered in Tokyo, Japan. Sony is the leading manufacturer of audio, video, communications and information technology products for the consumer and professional markets. It has also dabbled into entertainment and financial services such as motion pictures, music and insurance and banking sectors. It was founded on May 7th, 1949. Its current CEO is Howard Stringer. Its consolidated sales for the year 2009 were 7,124,000 yen. ERICSSON: Ericsson is headquartered in Stockholm, Sweden and employs 90,261 people around the world. It is the world leader in providing telecommunication services to mobile companies and fixed network operators. R&D is given prime importance at Ericsson and so far it has 27,000 patents in its name. Its President and CEO is Hans Vestberg. Ericsson has applications in the mobile, utilities and transport industries. Net sales for the year 2010 were SEK 203.3 billion/USD 28.2 billion. THE SONY ERICSSON JOINT VENTURE: This joint venture was established on October 1, 2001. This venture combines Sonys expertise in electronics and entertainment products with Ericssons technological experience in communications sector. Ericsson before the joint venture was the third largest phone manufacturer in the world. However it had been suffering from losses and was on the verge of selling out its mobile phone division. Sony before the merger was a minor player in the cell phone market with only 1 % of market share. The company announced the merger in April, 2001.

The joint venture did not yield immediate results and soon enough there were rumors that the venture would be scrapped. However SonyEricsson dispelled these notions by announcing to inject more capital in the business. Till 2005, SonyEricsson was in the fifth place in the market and struggling for its survival. The company courted success after the launch its W series of cell phones which had the Sony Walkman integrated into the phones. The Cybershot phones also met success. The case analysis attempts to answer the following questions:

What motivated the two companies to forge the alliance? Were there any alternative ways better than forming a joint venture to achieve the same motivation(s)?

What problems the JV has encountered since the formation? What strategies Sony Ericsson has used to address the JV problems and can these strategies lead to the long term success of the alliance?

RESEARCH METHODOLOGY

The data collected for the case analysis comes from sources like internet, magazines and newspapers. The data is related to the strategic initiatives taken by SonyEricsson and will chart the course of their merger. The report will also comprise of a critique on the logic behind the joint venture and its success or its lack thereof. The report will conclude with some recommendations by our group.

PROJECT TIMELINE
Week 2: Formation of groups. 4 members. Week 5: Submission of proposal report. Week 5 and onwards: Data collection Week 6: Drafting of report. Discussion amongst group members. Week 15: Submission of reports.

REFERENCES

The

SonyEricsson

Alliance.

Retrieved

27th

January,

2011

from;

http://www.ugma.unige.ch/Article_Archives/ArticleArchivesPrize2002-2.pdf

SonyEricsson,

In

Wikipedia.

Retrieved

27th

January,

2011

from,

http://en.wikipedia.org/wiki/Sony_Ericsson