Introduction
Sony is the global leader in electronics industry with operation in over 140 countries. The firm is involved in designing, improving, manufacturing and sales of electronic equipment and instruments, marketing of softwares and game consoles to final markets. In addition, it is involved in distribution of recorded music both at business format and musical genre.
The company is also engaged in financial service provision in Japan where it provides non life and life insurance, internet banking services, rental and credit financing. Finally, through its subsidiaries the company provides network and advertising business services.
Industry analysis
In U.S.A., electronics industry is one of the leading and the fastest growing sectors with electrical and electronics subsector contributing an estimated 10 percent of all produced goods. In 2008, the total sales were valued at an estimated US $ 244 billion, annual growth of (3.2) percent and employment size of 389,257.
Telecoms was the most active sector recording an annual increment of 18 percent while computer line slipped 5 percent due to global drop in computer prices and weak demand from Asian continent (Raymond & Benedict 1999).
The main challenges revolve around economic and financial instability. To start with, financial instability has lowered sales and profitability levels of most firms. In addition, credit crisis witnessed in major economies have also impacted negatively on the firms’ sales values. Secondly, the high input prices like petrol have resulted in the massive rise of prices making most products expensive.
However, the future of electronics industry is still very bright. This is because, first, there is renewed interest in electronic products in the fields of health, security, environment, and transport. Secondly, there is much demand within industrial revolution sector where electronics are viewed as the second most important engine for growth after oil.
Finally, there is increased demand from poor and developed states which have since outweighed global demand. To achieve these prospects, efficient leadership, cross border standardization and collaboration both at local and international levels, shortening of value chains and adequate financial service provision are the key pillars.
Macro economic factors
The analysis of macroeconomic factors aids in monitoring of market signals thereby shaping the external environment, it supports detection of markets operating within the external environment and finally provides an excellent connection between competitive and general environment. However, these factors limit industry’s competitiveness and the achievement of company’s corporate strategy.
The first main challenge to Sony is the instability in most of its operating locations. Although the company requires an assurance of no sudden and harmful changes to its investment, no such assurance is in existence. In addition, the increased level of privatization in most economies has increased the level of competition within the industry which has in turn lowered prices.
The second issue is the exchange rate complexities which makes it hard to sell products to the global market but cheaper for importers to sell within the local market.
Ming-Chang, Zuwei-Ching & Wei-Ling (2011) noted that exchange rate and money supply had a negative influence on electronics industry share prices in Taiwan. Moreover, the current increased interest rates due to economic crisis have had a negative effect on the firms’ profitability.
Thirdly, there is a rapid change in the consumer taste and preference which the company has to adapt to satisfy its customers demands. These changes result in fast product obsolesce and high cost. Finally, technological advancements like the use of internet, design softwares and nanotechnologies usually result in emergence of new and efficient industries resulting in more competition and newer efficient channels of marketing.
References
Ming-Chang, C, Zuwei-Ching, T & Wei-Ling, K 2011, ‘The impact of non-macroeconomic events on Taiwan electronic industry stock index returns’, Global Economy and Finance Journal, vol. 4, no.1, pp. 80-101. Web.
Raymond, YC & Benedict, A 1999, ‘Electronic data and trends’. Web.