Comparison Of Sony Corp. & Together For Short Lives: A Macro Environmental Essay.

Discuss abou the Business Management, These macro-environment factors are political, economic, social, technological, environmental and legal. This framework is popular among managers as it helps to develop an understanding of drivers of change in the external environment and their impact on business operations. 

The Differences between Sony Corporation and Together for Short Lives

Different organizations exist for different purposes. As such, they also differ in their structure, type, aims and objectives, size, etc.

Sony Corporation was established in the year 1946. Since then, the company has grown to become a multinational conglomerate with diversified range of operations into consumer and professional electronics, gaming, movies, music and financial sectors. Sony’s mission is to become a company that inspires and fulfills the curiosity of its customers (Sony, 2017).  The company follows a divisional structure where each product segment acts as a separate division along with functional structure with each division. Moreover, the scope and size of company’s operation is huge as it employed 125,300 employees and generated a revenue of £57,892 million (i.e. ¥8,105,712million) as of 31^st March 2016 (Sony, 2017).

Together for Short Lives was established in November 1, 2011 as a result of merger between ACT and Children’s Hospices UK with an aim to support and benefit children and people with life-shortening conditions. The charity’s mission is to secure the best quality of life and best end of life care for children with short lives. The charity operates under functional structure with three key functions viz. For the year 2015-16, its gross funding income amounted to £2.1 million along with £1,044k from grants, and £366k from fundraising events. The charity works across UK and has over 900 members- individuals, families and teams associated with it (Together for Short Lives, 2016).

Thus, stark difference can be seen between Sony and Together for Short Lives. Both of them differ on almost all the aspects right from type of business to their scale and size.

PESTEL framework categorizes macro-environmental factors that influence business organisations to a lesser or greater extend. These macro-environment factors are political, economic, social, technological, environmental and legal. This framework is popular among managers as it helps to develop an understanding of drivers of change in the external environment and their impact on business operations. Moreover, this framework assists managers in changing the strategies depending upon the possible changes in the macro factors (Wheelen and Hunger, 2012).

In context of Sony, the political, legal and social factors affect its business activities in following manner:

Political factors:  The political environment of any country can hinder or support business activities and expansion. While the military or political instability can pose threats in form of reduced operations and unsatisfactory financial performance, government support and political stability can positively affect these results (Sony, 2015). For example, governments around the globe, especially in developed nation are increasingly supporting data security, which provides immense opportunities for the company to expand in this sector (Greenspan, 2017).

PESTEL Analysis of Sony Corporation

Legal Factors: Sony is a global company and hence is subject to legal laws and regulations of all the lands in which it operates. Changes in trade policies, local regulations, taxation laws, foreign exchange controls, import-export controls, patent laws, labour laws, etc. may disrupt its operations and financial results. For example, changes in labour laws or labor regulations can disturb the manufacturing of the products, increase cost of production or create labour shortages (Sony, 2015).

Social Factors: The demand for products and their changes are determined by the social response received by the customers. The consumers are moving away from physical media forms like CDs, DVDs, etc. towards digital media and gaming. While this has reduced company’s business for physical media, it has also increased opportunities in digital media and gaming industry.

The demand for products of any company is influenced by numerous internal and external factors. These factors in turn not only determine the quantity demanded of the product but also shape the pricing, marketing and incremental innovation decisions related to the product.

In context of Sony Corporations, its Play Station VR is highly popular and in-demand product. The Sony Interactive Entertainment boasts of selling around 915,000 units of the PlayStation within five months of its launch (SIE, 2017). The influences behind PlayStation’s demand are analyzed as follows:

Internal Influences: Consumers perceptions and motivations are the internal factors that influence their purchase decisions. The company’s brand, and the quality of product in the form of better resolution, faster processing power, game library, etc. help in forming consumer perception regarding the product (Peckham, 2015). Further, challenge, fun, fantasy and curiosity supplemented by the aim to achieve goals are the motivators behind such purchases. Hence, their perception and motivation combines and induces the consumers to purchase PlayStation.

External Influences: Reference groups, cultures, sub-culture and social class form the part of external influences the shape buying decisions. The major users of PlayStation are young teenagers who are easily influenced by their peers, family, friends and idols. If any of their reference group endorses or uses this product, they too want to buy the same product. Further, culture and sub-culture domain for video games and consoles describes the use of PlayStation as “youth culture” and those who want to be part of it buy such gaming consoles. Lastly, social class also determines the purchase decision. Gaming consoles are sophisticate piece of technology they are highly priced and outside the reach of many consumers. Thus, only effluent class that can afford to spend considerable amount of money on gaming can purchase it.

The Internal and External Influences Behind the Demand for Sony's Playstation VR

While ethical conduct may seem contradictory concept to the profit-earning motive of business organisations, it is now considered one of the critical aspects of management and governance. Most companies tend to deal with ethical issues in the form of existing policies and forming code of conduct that guide the staff to ethically deal with operational issues (Cole and Kelly, 2015).  Sony Corporation, being a global organization, needs to consider ethical issues like compliance with local and international laws, anti-corruption, human rights, fair competition, protection of intellectual property rights, environmental conservation, employee and customer safety, and complete financial and non-financial information disclosure among  others (Sony, 2017).

The impact of conducting its operations ethically has wide implication for Sony in terms of maintaining a good brand image and ensuring sustainability. Ethical practices help the company to gain the trust of its shareholders, employees, customers, suppliers as well as the public. It helps in maintaining long-term relationships with its stakeholders to ensure sustainability of profits. Moreover, conducting business operations in ethical manner allows the company to provide superior quality products at best prices, ensure integrity of their dealing with suppliers, and government and provide a safe working environment to its employees and factory workers.

The ethical business practices of Sony affect its philosophy of innovation for quality products, help the communities and shape a sustainable society. Its ethical practices for community welfare are aimed towards environmental issues, occupational health and safety, and human rights. Sony’s procurement and manufacturing operations aim to address issues of air and water pollution through reduced use of hazardous wastes, waste management, recycling of products, site remediation, etc. to provide a safe and friendly environment to the community (Sony, 2015).

The three key drivers of globalization are market, costs and competition. Market globalization is increasing because the needs, tastes and preferences of global consumers are converging. As such organisations are developing identities, brand-names and marketing strategies that not only cater the needs of its global consumers but also help in saving costs. Need to become cost efficient, achieve economies of scale and attain competitive advantage are the reasons behind cost globalization that is driving the global organisations. These organisations are continuously searching for avenues throughout the globe that provide cost efficiencies in terms of low-cost labour, suppliers and manufacturers. Competition is another factor that is driving globalization. Organisations operating globally also exert pressure on its contemporaries to operate globally. Moreover, interaction between global competitors is increasing as a result of increasing movement of their products across borders. Additionally, organisations are leveraging their cost efficiencies to subsidize their competitive activities against local competitors (Johnson, Whittington and Scholes, 2011).

A news article talked about a recent acquisition of Altair Semiconductor by Sony. The analysis of the same revealed that the drivers of globalization are the underlying reason behind the acquisition. Sony’s motive behind acquiring the Israel-based chip making company is to compete against other companies in the industry that is focused on internet of things (Shu, 2016). Further, acquisition of Altair will allow Sony to undertake both, product development and market development thereby allowing it to expand the scope of its current operations. Moreover, acquiring an existing company will help Sony to save cost and time that will otherwise be required in establishing a new company from scratch. Thus, the key drivers of globalization viz. market, cost and competition are prominent in Sony’s acquisition of Altair Semiconductor.

References

Cole, G. and Kelly, P. (2015) Management Theory and Practice, 8^th ed. London: Cengage Learning.

Greenspan, R. (2017) Sony Corporation’s PESTEL Analysis and Recommendations, Panmore Institute. [Online]. Available at: https://panmore.com/sony-corporation-pestel-pestle-analysis-recommendations (Accessed: 17 March 2017)

Johnson, G., Whittington, R. and Scholes, K. (2011) Exploring Strategy, 9^th ed. London: Prentice Hall.

Peckham, M. (2015) The Surprising Reasons People Buy the PlayStation 4, Xbox One or Wii U, Time. [Online]. Available at: https://time.com/3723953/console-buyers/ (Accessed: 18 March 2017)

Shu, C. (2016) Sony Builds Its Internet Of Things Business By Acquiring Altair Semiconductor, Tech Crunch. [Online]. Available at: https://techcrunch.com/2016/01/26/sony-altair/ (Accessed: 20 March 2017)

SIE (2017) PLAYSTATION®VR SELLS THROUGH 915,000 UNITS WORLDWIDE. [Online]. Available at: https://www.sie.com/en/corporate/release/2017/170227.html (Accessed: 18 March 2017)

Sony (2015) Form 20-F, Investor Relations. [Online]. Available at: https://www.sony.net/SonyInfo/IR/library/sec.html (Accessed: 17 March 2017)

Sony (2017) Corporate Info. [Online]. Available at: https://www.sony.net/SonyInfo/CorporateInfo/data/ (Accessed: 20 March 2017)

Sony (2017) Management Approach. [Online]. Available at: https://www.sony.net/SonyInfo/csr_report/compliance/ (Accessed: 18 March 2017)

Together for Short Lives (2016) Trustee Report and Financial Statements. [Online]. Available at: https://www.togetherforshortlives.org.uk/assets/0001/6475/TfSL_-_Financial_Statements_2015-16_-_Final_-_SIGNED.pdf (Accessed: 22 March 2017)

Wheelen, T. and Hunger, J. (2012) Strategic Management and Business policy: Toward Global Sustainability, 13^th ed. London: Pearson Education.