Strategic management assignment help writing analysis on : Case analysis on Sony and Apple’s performance
Q?? Write a case analysis on Sony and Apple’s performance??
Solution the paper frames is::
Introduction
The one thing that is constant in this world is change itself; this statement holds true in the world of business as well. It is essential for managers to understand and accept the fact that the business environment is ever changing. Strategic management is a tool which helps managers in coping with the dynamic nature of business. It can be defined as “The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organisation and its environment so as to achieve organisational goal” (Daft & Marcic, 2009)
Through this report an attempt has been made to understand how two major multinationals (Apple and Sony) employed the concept of strategic management and what was the result of the same. This report focuses on analysing the importance of strategic management via examining the strategies employed by Apple Inc and Sony Corp. Further, the strategies have been evaluated on the basis of SAFe criteria. A brief account on the challenges faced by the companies has been stated towards the end.
Apple Inc
Apple’s success story is inspiring, amusing and commendable; it was cofounded by Steve Woznaik and Steve jobs in the 1970s. With every passing century Apple brought something innovative in the market. Before 2001, the year of the Ipod launch, the company was going through some critical time. Sales had fallen to under $6 million and operating income of $522 million turned into a loss of $344 million. Sale in USA and Europe had fallen by 30% and in Japan it was more than 50%. The company needed radical remedy to come out of this precarious situation. The top team of Apple realised that the consumer market has a lot of potential and it is vastly untapped. Apple considered consumer electronics like video cameras, digital cameras, DVD players and MP3 players; after thoroughly analysing its options it chose MP3 Player. Subsequently, in the year 2001 Apple introduced IPod and since then the winning streak has continued. Apple has always been able to identify the opportunity present in the market and has manufactured a product which always exceeded customer expectations. Apple’s unique characteristic is that it doesn’t not capture market share rather it creates a market of its own.
Sony
Sony is one of the leading manufacturers of consumer electronics; the company was founded in Japan by Masaru Ibuka and Akio Morita in the year 1946. Sony has many established products to its credit such as Bravio, Viao, Tablet, HandyCam, Cyber-shot, Walkman, Xplod, Sony hi-fi, Memory stick and Play station etc. Sony gives utmost importance to quality, unparalleled standards of service and customer satisfaction.
Unfortunately, Sony has not been able to cope with competition and is lagging far behind. The management of the company has been aggressively trying to bring the company back to its original state via a series of reorganisation programmes. Business analysts opine that the reason behind Sony’s ailing health is its tradition bound mentality. The silo culture prevalent in the company prevents its employees to communicate and cooperate with each other. In today’s competitive world, it is necessary for business organisations to work as one whole unit. Even after the introduction of radical reforms, the company has not been able to solve its problems.
Evaluation of Apple’s Performance
Apple’s streak of success gives rise to one question, how can every Apple product be so successful. Some give the credit to Steve Jobs’ genius where as others believe the reason to be the company’s marketing strategy. However, the true reason is the company’s ability to devise viable strategies and implement them successfully. The last decade has been particularly profitable for Apple; the company posted a net profit of $8.8 billion for the third quarter of 2012 which is $1.5 billion more than last year. Since 2001 the company has only seen rise in its income. (AppleInc, 2012) Apple faced the same set of problems which were faced by other companies like recession and decrease in consumer spending; it was the strategic management of Apple which kept the company afloat during uncertain times.
Having a great product is just not enough; there are numerous other factors which have to be taken care of. Apple has always marked its product at a premium price; this is a pricing strategy known as Price skimming. This strategy helps the company in placing its product higher than its competitors since customers often link value of the product with its price. (Lamb, Hair, & McDaniel, 2009) The company has been extremely successful in positioning its products; the brand value is extremely strong. Apple has been able to market its product as superior and customer’s support made the notion stronger.
Evaluation of Sony’s Performance
In the 90s Sony was one of the most powerful and dominant player in the consumer electronics segment. The company has had significant product milestones like Japan’s first transistor radio, colour television, walkman, Handycam, and Playstaion etc. Unfortunately, the company was unable to maintain its position in the market. Management gurus and business scholars reckon that the reason behind Sony’s failure was its inability to recognize opportunities. The question which baffles everybody is why Sony did not come up with a MP3 player after successfully selling walkmans. Sony could have launched a product like IPod much before 2001but it failed to seize the opportunity. (Nathan, 1999)
The organisational culture of Sony is also to be blamed for the company’s distressed condition. The top management of the company discouraged cooperation and communication between different sections; whereas innovation required coordinated efforts. It will be imprudent to say that Sony products were not up to the mark, the products were excellent, bad timing was the culprit.
Sony’s strategy was to give a lot of options to the customers and this strategy proved to be successful in the past but the current product line confused the customers. There are so many variants that the customers have a hard time deciding which is the best for them. Whereas, Apple products offer a lot of customisation to the customers; this improves the overall product experience. Sony concentrated exclusively on hardware, Apple on the contrary was able to capture market because of combining the power of software and hardware. (Hill & Jones, 2008)
The Suitability, Acceptability and Feasibility Criteria
Strategy evaluation is conducted to meet two purposes a) to analyse past performance b) to choose the best strategy from various options. One of the popular methods of evaluating strategies is to test it on the basis of suitability, acceptability and feasibility. Given below is a brief description of each factor.
Suitability: this factor focuses on how well the strategy is able to exploit the opportunity in hand. Does the strategy capitalise on the organisation’s strengths, weaknesses and capabilities etc? (Anthony, 1999)
Acceptability: this factor investigates whether stakeholders will accept the strategy on the basis on of the three Rs (Risk, Return, and Reaction)
Feasibility: this factor questions the applicability of the proposed strategy; strategies which look good on paper often fail on implementation. It is the duty of the management to analyse weather the current resources of the company are enough to support the strategy. (John & Gillies, 2002)
SAFe Analysis of Apple’s Strategy
In the year 2001, Apple declared its Digital Hub strategy in its financial report; the strategy envisioned Apple Mac at the centre of a wide range of consumer electronics like digital music players, personal digital assistants and gaming consoles etc. This strategy has proved to be extremely useful for the company because after 2001 Apple never looked back. Digital hub strategy met all the three parameters; it was able to identify the opportunity in the digital music player market (suitability), the returns were much more than expected (acceptability) and the constant research and development did not drain the company’s resources (Feasibility) .
Apple’s current strategy revolves around identifying opportunities and meeting them innovatively. This strategy is evident in the launch of IPhone, it is not that touch screen phones were not available in the market; on the contrary the market was flooded with many touch screen models. Apple launched IPhone when the mobile phone industry was at a standstill; there was no new technology in the market. The company again successfully identified the void in the market and introduced a highly innovative product. Iphone exceeded all expectations and became immensely popular; the success of Ipod also gave considerable help to Iphone. Apple’s ability to combine the powers of hardware and software has given it competitive edge over other companies. (Ireland, Hoskisson, & Hitt, 2009)
SAFe Analysis of Sony’s Strategy
Sony’s strategy involves massive reorganisation and restructuring. Howard Stringer, the first non Japanese CEO of Sony identified five main challenges faced by the company 1) silo culture 2) decreasing profitability 3) lagging in technology 4) No software to backup hardware 5) non profitable investments.
The restructuring strategy devised by Stringer aimed to mitigate these challenges. On evaluating Stringer’s strategy it can be deciphered that it met all the three parameters, it was suitable since it was the need of the hour, the stakeholders were desperate to see results (acceptability) and it was feasible since it was the only way to sustain the company. (Chang, 2008) Unfortunately, Stringer failed in his attempts to revive Sony.
Kazuo Hirai, the man who reinstated the gaming division of Sony has been appointed as the new CEO of Sony Corp. Hirai is determined to take some painful steps in order to bring back the lost glory. He aims to weed out all non profitable business units and undertake heavy cost cutting since the company is in a financial crunch. It goes without saying that a lot of people will lose their jobs; however, the question is can company survive another brutal restructuring.
Challenges in Implementing Strategies
The imminent challenge for Apple is whether it will be able to maintain its winning streak. Apple has set very high standards for itself, if the company introduces a new product it has to be ground breaking or else the customers will get disappointed. Meeting such high expectations is one of the major challenges faced by the company. Popular notion is that Steve Jobs is responsible for bringing all the fortune to the company; under his able guidance the company rolled out products like Ipod, Iphone, Ipad, and Macbook etc. The second challenge is to thrive without Steve jobs; the growing competition from Nokia, RIM and HP etc does not make the task easier.
As stated before, the biggest challenge in front of Sony Corp is to survive another attempt at restructuring by Kazuo Hirai. The company has been in the mode of restricting since 2005 and no plausible results have been achieved so far. These remedial actions also cost a lot to the company which is why the imminent challenge is to get out of the debacle.
Conclusion
A great strategy can turn an ailing company in to the world leader; the story of Apple’s success supports this statement. Similarly, inability to device a competitive strategy when necessary can mar the future of a company; the story of Sony exemplifies this statement. Through the research done for this report it can be concluded that managers who can anticipate and identify opportunities and subsequently device appropriate strategies can turn their companies around.
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