INTERNATIONAL BACCALAUREATE DIPLOMA

PROGRAMME

BUSINESS MANAGEMENT RESEARCH PROJECT –

HIGHER LEVEL

“Can “Sony” expand its business to East Africa in order to increase

its profit and market share?”

Session: May 2018

CANDIDATE CODE: GWJ565

WRITTEN REPORT: 2215

EXCECUTIVE SUMMARY: 175

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EXECUTIVE SUMMARY (ABSTRACT)

This research proposal is an examination to conclude whether the expansion of Sony

into East Africa is a viable option or not to increase their overall profit margin and

market share.

The viability of this object was checked by observing the present position of the

company, their market shares and the current profit margin sustained. The data was

collected by interviewing managers, clients, and customers of Sony MEA and also

through secondary research data to justify the feasibility of the expansion. From the

survey, it is seen that Sony plans to increase their overall market share and profit

margin with the expansion. The research was conducted in Sony’s PSMEA

headquarters in Dubai and explored whether the market conditions are favorable and

whether the current capital retained along with the market share in the MEA region is

sufficient for Sony to expand into Madagascar and Mauritius. The survey helped Sony

understand where all they can develop in order to increase their chance of success in

the expansion to further their profit margin and overall market share.

Word Count: 175

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 Acknowledgement

I would like to thank the management of Sony PSMEA for allowing me to conduct my

research in their headquarters in Dubai. The employees, financial manager (Mrs.

Patricia Torres), Project Manager (Mr. Unnikrishnan) and everyone else involved for

helping with the data collection. I would also like to thank Ms.Sreeharinee, my teacher,

for her guidance throughout this research proposal as well as my IBDP Coordinator, Mr.

Kalairajan for his support.

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Contents
INTRODUCTION: ...................................................................................... 6
RESEARCH PROPOSAL: ............................................................................ 6
RESEARCH QUESTION: ............................................................................ 6
RATIONALE:............................................................................................. 7
METHODOLOGY: ..................................................................................... 7
THEORETICAL FRAMEWORK: .................................................................. 9
KEY AREAS OF SYLLABUS ...................................................................... 9
ACTION PLAN: ....................................................................................... 10
MAIN RESULT AND FINDINGS: .............................................................. 11
SWOT ANALYSIS ................................................................................. 11
ANSOFF MATRIX ................................................................................. 12
GRAPHS: ................................................................................................ 13
FINANCIAL RATIOS: ............................................................................... 18
ANALYSIS AND DISCUSSIONS: ............................................................... 19
CONCLUSION AND RECOMMENDATIONS: ............................................ 21
BIBLIOGRAPHY: ..................................................................................... 23
APPENDIX-1: ......................................................................................... 24
APPENDIX-2: ......................................................................................... 25
APPENDIX-3: ......................................................................................... 26

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INTRODUCTION:

Sony, established by Akio Morita and Masaru Ibuka, is multinational conglomerate

headquartered in Konan, Minato, Tokyo. Its diversified business includes consumer
and professional electronics, gaming, entertainment and financial services. I will be
concentrating on Sony’s Middle East division and the prospects of its future endeavors.
Sony PSMEA which is part of the Sony Corporation headquartered in Japan looks after
the professional products in segments such as Broadcast, Medical, Security, and
Education. An active player in this field with quality products and solutions ranging from
professional cameras used in broadcast studios and film production to business
projectors seen in boardrooms and classrooms. Sony PSMEA is based out of Dubai
looking after the Middle East and Africa (MEA) and Russia and CIS and directly reports
to Japan HQ. An office with 100 people employed at their Dubai HQ, the sales strategy
is mostly B2B with strong dealer and distribution network. However, direct sales to key
broadcasters in the region also take place. Sony now is planning to expand its business
(in the education and corporate vertical) to East Africa, mainly Madagascar and
Mauritius and believes that it will be beneficial for them to do so.

RESEARCH PROPOSAL:

RESEARCH QUESTION:

Can “Sony” expand its business to East Africa in order to increase its profit and market
share?

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RATIONALE:

The IT sector in the recent years has seen a high boost, especially regarding
corporate/business and educational fields. Smart classrooms with hi-tech facilities and
tech-savvy board meetings require a business to expand in this sector that can have
long-term benefits.
Sony is an active player in the field of education and corporate solutions. The company
focuses on differentiating its business from competition by offering end-to-end solutions
rather than a "box" product. The survey analyses the present position of the business by
using various business tools and financial analysis as well as aspects the company will
have to focus in, to gain profits as well as flourish in the new region and in the education
and corporate vertical in this industry.

METHODOLOGY:

Throughout the Research proposal, various resources will be used to answer the
research question. The primary research will be conducted by interviewing the Finance
& Control Manager of Sony PSMEA, Mrs. Patricia Torres.
Primary information will be collected from the Project Manager and the employees of
the company during my contact with them at their office in Dubai to help with my essay.
This information will include organizational practices and the opinions on the expansion.
- About the expansion and its cost.
- The customer base in Africa.
- The number of customers in East Africa.
- Availability of skilled labor.
Secondary Research will be collected to benefit my essay by further supporting it using
statistical information such as graphical data. It will include financial information, online
resources, and articles regarding the expansion of companies in the same field, its
effects on the business as well as more.

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Methods used to collect and analyze data

Possible problems Solutions

 Conducting the interview with  Will conduct the interviews during

managers and employees as I holidays.
live in a boarding school in a  Creating online and written
different region. survey’s for the employees to fill
 Biased response of the in during their free time with easy
employees and reluctance. direct questions.

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THEORETICAL FRAMEWORK:

In my research proposal the challenges and the positive aspects of the business
expanding into East Africa will be present through the use of the primary and secondary
research. The tools and techniques used will be SWOT analysis, Ansoff Matrix, ratio
and financial analysis (using graphs and tables)

KEY AREAS OF SYLLABUS

1.6) Organizational Planning Tools – Interviews, SWOT analysis and Ansoff Matrix.

3.5) Financial Statements

3.6) Ratio Analysis

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ACTION PLAN:
DATE ACTION

30TH JULY 2017 TOPIC AND COMPANY CHOSEN.

4TH – 7TH INITIAL PROPOSAL

AUGUST 2017

9TH AUGUST TEACHER’S ANALYSIS OF THE PROPOSAL

2017
10TH-14TH RESEARCH AND ANALYSIS OF THE COMPANY AND MARKET
AUGUST 2017
16TH AUGUST INTERVIEW DATES DECIDED
2017
17TH AUGUST DESIGNING INTERVIEW QUESTIONS
2017
20TH AUGUST INTERVIEW WITH THE FINANCE MANAGER AND PROJECT
2017 MANAGER OF THE COMPANY
22ND AUGUST SURVEY FOR CUSTOMERS AND CLIENTS CREATED
2017
28TH AUGUST BASIC INTRODUCTION STARTED
2017
30TH AUGUST SURVEY CONDUCTED WITH THE CUSTOMERS AND CLIENTS
2017
5th SEPTEMBER DATA COLLECTED FROM SURVEY
2017
10TH FIRST DRAFT SUBMITTED
SEPTEMBER
2017
20TH TEACHER’S COMMENTS ON THE FIRST DRAFT AND
SEPTEMBER APPROPRIATE BUSINESS TOOLS
2017
1ST NOVEMBER FINAL DRAFT SUBMITTED
2017

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MAIN RESULT AND FINDINGS:
SWOT ANALYSIS

Strengths
 Sony, being a huge conglomerate, has a popular and useful brand image,
attracting prospective customers and investors.
 Availability of the latest technology and machinery.
 Being, a large company, the allocation of space will not be a problem, and the
expansion will increase area further creating jobs for future employees.
Weakness
 Lack of skilled labor in these parts due to the developing economy as well as the
literacy of the people in this region.
 Hence, increased workload on current employees to meet current demands,
leading to more costs (on salaries, etc.) needed to be satisfied by the company.
Opportunities
 Opportunity to spread out into a new region and sell their products. This will
increase the revenue of the business and also the market share since the market
in East Africa still hasn't been penetrated into by any other company – this also
gives Sony a first mover advantage.
Threats
 The market for technology in the educational and business sectors is ever
increasing and has a lot of competitors. This is a significant threat to the firm.

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 ANSOFF MATRIX

PRODUCT

Existing New

M
A Existing Market Penetration Product Development
R
K
E
T

New Market Development Diversification

The Ansoff Matrix is a business tool that helps the business plan and set objectives
according to their position and capabilities. It consists of four sections which are:

 Market Penetration
 Product Development
 Market Development
 Diversification

Sony, wanting to expand into East Africa comes under the Market Development section
of the matrix and should focus mainly on Market Development strategies.

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GRAPHS:
The presentation of the charts is based on the research conducted for the study.

Market Share for the Projector Business in MEA

30%
40%

30%

Epson Sony Other small players

Figure (1)

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This graph shows the market share of Sony and its major competitors in the Middle East
and Africa (MEA) in projector business.

Market Share in the Display Business

40%

60%

LG & Samsung Sony

Figure (2)

The graph above shows the market share of Sony and its major competitors in the
Display business field in the Middle East region.

Market Share in Education and Corporate

Vertical

15%

85%

Sony Other competitiors

Figure (3)

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The above graph depicts the market share of Sony in the Education and Corporate
Vertical in the MEA (the Middle East and Africa) region.

The following charts are taken from the survey conducted on customers of Sony about
their services and products. These graphs constitute the responses of both customers
and clients of Sony MEA.

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FINANCIAL RATIOS:

 Return on Capital Employed (ROCE):

 Net Profit Margin (NPM):

(Note that: these ratios are calculated for Sony Global and not concentrated just on the

MEA region and the currency is Japanese Yen [¥].)

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ANALYSIS AND DISCUSSIONS:
Sony is considering expansion into East Africa focusing on Madagascar and Mauritius
in order to increase their overall profit and market share in the Education and Corporate
vertical.
The SWOT analysis helps the business to identify the strengths and weaknesses of the
business during the expansion procedure and the expected result after doing so.
The firm's primary threat when talking about expanding to this market is the lack of
skilled laborers in East Africa – caused by the low literacy rate in this region and the
lack of education – which in turn causes the workload and salaries of the current
employees to increase. The Finance Manager, need to work towards a solution to
allocate the finance accordingly, in order to achieve the predetermined goal.
Expansion into these regions can help Sony bolster their profits as well as help these
countries. The entry of Sony into these markets may create job opportunities for the
people of Madagascar and Mauritius. Since they are expanding in the Education and
Corporate vertical, it may help the people by creating new schools and educational
facilities to train prospective employees. The first mover advantage may help Sony to
capture the market due to the first mover advantage and with their brand image, can
attract many prospective clients and consumers.
The matrix aspects the growth potential regarding the markets and product and it takes
consideration of both existing as well as new markets and products. The Ansoff Matrix
consists of four segments. Sony, has been there in the market for a very long time and
is considering expansion into East Africa and therefore comes in the category of Market
Development. In this phase, companies look at expanding their market by finding new
markets and market segments to penetrate. This strategy is riskier, comparatively.
This is may be due to the lack of ability to understand these new markets. As Sony
seeks expansion, their primary focus should lie in Market Development.
The company needs to take the utmost priority when scouting these new markets, by
considering all necessary aspects when diversifying into them. If Sony fails to do so, this
may lead to failure in the expansion and ultimately earn the company losses rather than
gains

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With the help of the efficiency ratios, Sony can understand how effectively the assets
and liabilities are utilized. Financial ratios help the business analyze their performance.
The ROCE ratio measures the efficiency and profitability of the company’s invested
capital by assessing the returns it is making from the capital employed. The ROCE
value derived with the formula was 7.74% (approx.) for the year 2017. This is a
comparatively low ratio for Sony as it shows that for every 100¥ they invest the profit
that they generate is approximately 8¥. The higher the ROCE, the higher the returns are
for the business from the capital invested. This is an incentive for business owners to
inject more capital into their business for the hope of higher yields. Sony can try to lower
their loan capital while unchanging or increasing the net profit. While this may be a
problem, since the loan capital may be required to purchase machinery etc. to generate
the profits, striving to lower to is a possible strategy for Sony. Comparison with previous
years or other firms ROCE can help the business understand and implement their
strategies better.
The NPM is the measure of the profit that remains after subtracting all costs from the
sales revenue. The NPM of Sony in 2017 is approximately 3.31%. This shows that for
every 100¥ of sales revenue earned, Sony retains only 4¥ as a profit. This again is a
low value and if boosted can help Sony to achieve daily expenditure requirements,
retain capital for future endeavors such as expansion and also improve in ploughing
back into the business. The firm can diagnose the use of indirect costs such as rent,
electricity, etc. and avoid unnecessary expenditure. This could help in cutting down on
wasteful spending and input that capital into a more activity. The financial information
shown here is based on the information through primary and secondary research
conducted; however, the availability of data is for the verticals of Sony. This is a
challenging aspect of the analysis as it is based only on the business information. This
could be a limiting factor on the work conducted.
Graphical representations:
The market share for Sony in the projector business is high with a 30%. Its primary
competitor is Epson, but since Sony works on providing more than just projectors, this is
an excellent value. Sony may face competition in East Africa and it needs to increase its
market share to deal with Epson in the projector business field.

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The second graph shows the market share of Sony in the display business in the MEA
region. Sony, being the leader with 40% (Samsung and LG together constitute 60%) is
well known in the area for the display.
The third graph depicts the market share of Sony in the whole Education and Corporate
sector in the Middle East and Africa region. While 15% may seem like a small number, it
should be considered that there are a vast number of competitors in the field to
contribute to the other 85%; making 15% an enormous amount. This shows that Sony is
quite well-off and well known in this region for their work and products in the Education
and Corporate Vertical and the expansion into East Africa will help them increase their
market share as well as their profit margin. The graphs projecting the customer
responses towards Sony's products and services, based on their experiences with the
business’ products. The answers were from consumers and clients of Sony. The
responses were all good with an exception of a few people. The information is based on
their opinion and perceptions, hence could be a limiting factor on the research work
done. On the other hand, conducting and collecting this data, first hand allowed for a
wider understanding of the company which helped in the research.

CONCLUSION AND RECOMMENDATIONS:

This research proposal has explored the prospect of Sony’s expansion into East Africa
that will increase profit and market share. Though few stakeholders were reluctant to
give more response, it is quite evident from various resources that the company’s
general performance is good. The increase in profits will help the firm in its future
business activities. With Sony's current position in the market and its outstanding
market share (in the Corporate and Education vertical MEA), Sony can go for the
expansion to Madagascar and Mauritius in order to increase overall profits and market
share. The company may have a better business prospects in its expansion to East
Africa.
The following recommendations can be considered by Sony to have a better market
position and to be on the safer side before the expansion:

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  The firm can adopt market development strategies, as seen from the Ansoff
Matrix, to have an advantage over competitors in East Africa.
 The business can consider working on their ROCE and NPM to gain higher
profits and lower their loan capital. This may help Sony have a better rate of
success from the expansion.
 Increasing the ratios – hence growing profits – can help Sony further their
activities in the current region by plowing back profits. This may increase their
market share in the current area thereby increasing their brand image.
 The firm can give training to their employee’s as well as future employees in East
Africa. This will help them by eliminating the threat (mentioned in the SWOT
analysis) of the lack of skilled laborers present in the region. This may also help
boost the economy of Madagascar and Mauritius.

Given these recommendations and the current position of Sony in the market, the
expansion seems to be a viable option for the business. Sony has the time and the
capital required to expand into the new market while increasing profits and their market
share.

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BIBLIOGRAPHY:

“Investor Relations.” SONY, www.sony.net/SonyInfo/IR/financial/.

Hoang, Paul. International baccalaureate business and management. Ibid Press, 2014.

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APPENDIX-1:

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APPENDIX-2:

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APPENDIX-3:

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