Running head: MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 1

EXTRACTING MANAGEMENT PRACTICES USED IN SONY FOR THE LOCAL

INDUSTRIES

(Group Assignment-01)

By

Mr. W.D.L.S. Weerasekera (2009/MBA/WE/53)

Ms. S.P.T. Thejani (2009/MBA/WE/54)
Ms. K.S. Tennakoon (2009/MBA/WE/55)
Mr. K.N. Marasinghe (2009/MBA/WE/63)
Mr. S.I. Dharmasena (2009/MBA/WE/66)

Semester I – First half

January 2010

Course: MBA 530 – Management Process & Practice

Lecturer: Mr. Chandana L. Aluthgama B Com (sp), FCMI, MBA

Postgraduate and Mid-Carrier Development Unit

Faculty of Management and Finance

University of Colombo
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 2

Abstract

There are many potential industries in Sri Lanka who are trying to reach the global market, as
well as new industries that are already established in the global context but needs more
guidance in maintaining their sustainability.
The case study on ‘local globalization’ strategy of Sony illustrates many strategies they
used in order to become what they are today. This document introduces the Sony
Corporation briefly and then outlines those strategies targeting the main key functions of
management, which could be used in our Sri Lankan industry.
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 3

Sony Corporation
Introduction
Sony Corporation is one of the major Japanese manufacturers of consumer electronics
and also multinational conglomerate corporation headquartered in Mintao (Japan). It is one
of the leading manufacturers of electronics, video, communications, video game consoles and
information technology products for the end consumers and professional markets.
Sony is among the worldwide top 20 Semiconductor sales leaders. The company's slogan
is Sony. Like no other. This itself resembles the main objective of the company which is for
them to have a top quality product brand name unmatchable to any other. Sony is the
electronics business unit and the parent company of the Sony Group which is engaged in
business through its five operating segments, these make Sony one of the most
comprehensive entertainment companies in the world.
Sony’s principal business operations include:
• Sony Corporation
• Sony Pictures Entertainment
• Sony Computer Entertainment
• Sony BMG Music Entertainment
• Sony Ericsson
• Sony Financial Holdings
The Sony management’s timely decision of introducing Sony to the overseas market and
their concept of ‘local globalization’ was one of the main leap-frog situations for Sony which
enabled it to be a multinational pioneer in its field.

(Sony Coperation, 2009)

MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 4

Management practices of Sony in the Sri Lankan context

To achieve the objectives towards the local globalization, Sony Corporation mainly
focused on the strategies in all the areas of the management interlocking functions i.e.
Planning, Organizing, Leading and Controlling at the most suitable time. That was the
success behind Sony and it is the core aspect of the success of any organization.

Planning strategies
Sony Corporation followed very important planning strategies to capture the global
market in a comprehensive way. They used step by step methodological approach to fulfill
their objectives and put the maximum effort to keep the achieved standards constant and took
steps to sustain with growth.
Before starting the business operations in a country, Sony planned and organized business
trips to find out the potential capability and local distribution channels, even in certain areas
of the world where it was not reachable that easily. Then they established the connections
with them and conducted the market researches appropriately. The objective of the market
researches were to identify the demand, the taste of the people and the significant barriers and
then to prepare early for those.
In Sri Lankan context, there are several organizations who did not enter to the global
market yet or who are still struggling to enter. Also there are some companies who have
already entered into the global market, but still they have to develop further. These
organizations can also follow the early preparation strategies used by Sony Corporation. For
example, when the bottled water industry is considered, they have to find out the potential
markets worldwide. Most probably high demand will be from Middle East countries where
water is found as a highly scare resource. But first of all, they have to identify the demand
volumes existing for that product in each country and existing barriers such as competitors,
government intervention, rules and regulations and other environmental factors. Then the
plans can be prepared early to face the situations before entering to the market.
Sony Corporation did not afraid to take the challenge of the risks that were going to be
faced while attaining its overall vision of achieving a world renowned brand. At that time
they did not forget to use country specific corporation names to capture the familiarity of the
locals.
In the same way, when Sri Lankan organizations try to capture the global market, they
will have to face several challenges, but they should be capable enough to face them
successfully and hence achieve the desired goals. Brand name is a key factor in the
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 5

international market and it should be selected carefully by learning the cultures and attitudes
of the intended market segment. The brand name should be something which have a special
attraction to the customers in the overseas market and meaningful to the intended segments
without leading to any negative picture driven by their native languages or cultures. As an
example the well known brand in Sri Lankan market for bottled water “American water” will
give a counter effect when placed in Iran. Though Iran is a good potential market for bottled
water industry the said product with same brand name will not capitalize the opportunity
because of the negative picture creating in Iranian culture due to the word “American”. Most
importantly the new brand name should also not produce any impact to the product’s image
which was cultivated locally.
Moreover, the management of these companies should be strong enough to take the risks
which will cause during the transition and should be skilled enough to use the management
strategies to mitigate those risks. Then the employees of those organizations will be
motivated and there morale will be improved. This will definitely bring good impact to the
organizations to fulfill their attempts. For Sony Corporation, the support and the motivation
received from its top management to its employees was really helpful for them to approach to
their ultimate goal. Moreover, there were times they failed, but they consider it as a learning
point for their business. This positive thinking may have really been affected for their
success. For example, the fall of one of their plants at Ireland was not taken negatively. This
positive approach can also be used by Sri Lankan industries. When Sri Lankan industries
enter to international market, initially they will have to face many problems. But by using
target oriented positive approach with proper remedies and risk mitigating strategies, these
challenges can be won.
Sony Corporation paid their attention to each and every aspect in its business. They used
maximum resources from their country to invent new things and to export them to the foreign
market. In Sri Lanka, there are still some natural resources, which we have not used it for
earn foreign exchange, although many of them have a good potential to win the global
market. For example, the Phosphate rig in Eppawala and the iron rig in Kooragala area near
Balangoda. Proper market researches should be done to identify that in which forms Sri
Lanka can place these two natural resources in the global market. The past investigations
have shown that iron in Kooragala has the best composition for Ferrite which is essential for
electronic industry.
Order of business strategy that was followed by Sony corporation was first to build a
distribution system. Then after gathering enough knowledge about the market, production
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 6

facility has been brought into the picture and production plants have been implemented. For
example a Sri Lankan food company like “SMACK” can enter in to international market with
its products. If “SMACK” can get the support of government to make agreements with
foreign countries’ education ministries to supply its fruit products to school cafeterias, then
they can easily enter to the market. Also if SMACK initially carries their overseas business
targeting the school children especially teenagers, it will help to penetrate into the market
gradually. Thereafter, they can establish SMACK manufacturing plants in those countries as
well.
When Sony couldn’t sell all its products in other countries they used merging strategy to
capture those markets. At the time, Sony tried to enter to the local market of America, it
merged with another company Gendis Inc. who was a dealer with a long history of selling
Sony’s home-use audio products in order to capture the American market very easily. This
strategy is also very helpful for local industries as well, because still the foreign market
condition for Sri Lankan industries is not much developed. If they can merge with well
reputed companies who already captured the global market, Sri Lankan industries will also
get the chance to enter to the foreign market and will be able to earn more profits.
Whatever the challenges Sony Corporation faced, they never degraded their standards on
quality of product that was maintained and didn’t affect the brand image which laid the
foundation for sustainability. This is a very good strategy which the Sri Lankan industries
should learn in order to maximize the profits and to protect the brand name.
In order to clear the bad image that was forming in the US government, Sony had a
strategic plan of importing US goods to the Japanese market. This is also a very good
strategy which Sri Lankan industries should adopt to create a win-win situation.

Organizing strategies
One key aspect that we could extract from Sony regarding their organizational aspects
was that, a dedicated department was formed to handle the affairs on international
development, and it was solely their main job that was assigned. If we take this strategy this
will give them time and resources to focus solely on this, identify the most appropriate
strategies at the right time. Also when concerning the inter-national market, there’ll be
additional considerations that need to be done like for example, additional custom related
activities and need to consider about the government rules that are imposed by all countries.
When considering the health-care industry, such as Vendol Lanka (Pvt) Ltd, they should get
the required standard certifications when trying to export. The top management does not
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 7

have to spend time on deciding on minute details, but they can consider other expansion
areas, since a dedicated staff is already allocated to the same.
When localizing in foreign countries, adaptability to their culture, styles, origins are vital
to the growth of the company in the new location. Sony always made sure to identify the
most appropriate individual for each task, when allocating human resources to initiate
operations at a location. The allocated person might have to take urgent decisions on their
own, and they should always be wise and accurate decisions which benefit the company.
Also more importantly these people should be given the authority in addition to their heavy
responsibilities. Otherwise it would definitely be useless in the context of business growth.
Another point is that, before the employees were sent into the separate destinations to start
business, they were given proper training at the domestic markets to ensure they had the
ground knowledge needed for their activities.
Once the initial know-how is obtained the Sony Management on appropriate incidences
made sure to give detailed instructions on all processes and explain exactly on how they were
carried out. This enabled the sustainability of the company with the same quality of standard
relevant to that specific country.
When starting on a fresh location Sony was cautious, not to have too much cost spent on
their resources and use the most minimal set of resources needed. This was shown when they
started business at Sony Hawaii. This can be a taken as an important message to our Sri
Lankan context also, since unnecessary high initial capital would not be a welcoming point to
any developing country when they try to invest on the most beneficial investment. For
example, when Mundo Gas Corporation was trying to establish its market in Sri Lanka, it
failed due to external reasons such as legal restrictions. So if they had had very high hopes
and had invested unnecessarily on the same, the whole situation would have brought a loss to
the company. Therefore, the essential minimum set of resources should be used in the most
optimum way to reduce unnecessary costs which can be avoided.
For Sony, as raising capital became a major concern at one point, they showed self
sustained characteristics by issuing American Depositary Receipts and earning a substantial
amount of money that was required. This was a wise strategy that was followed because
when doing that financially it’ll affect less to the mother company as capital is collected from
the target location itself. And it also establishes the company in target location by creating
win-win situation for both parties.
One of the initial goals of Sony when going to a new location was to find potential
distributors. But they made sure to do the homework needed regarding this by market
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 8

researches carried out by obtaining information from banks and the chamber of commerce to
get the financial status and so on. We should also make sure that after a task is allocated to
start operations, the responsible person is made sure to lead in doing the market research
required to identify the most appropriate distributors, which could be the portion who has a
bigger chunk of market share currently. The relevant information should be gathered to
identify the most suitable candidates. After making entry into the initial market by the said
approach, Sony avoided going through distributors to eliminate unnecessary costs and
maximize the profit gain, they dealt straight with the dealers it-self. This could be adapted to
take the most appropriate strategy at the most relevant time. A success story in the Sri
Lankan context would be Damro having 35 showrooms in India and 7 showrooms launched
in Australia. (Damro Sri Lanka, 2010)
Sony at one instance recruited local fresh recruits who were inexperienced and unbiased
were hired and they were not given training, but were motivated to learn on the job and
invent their way of doing things in the most productive way. This was because they didn’t
want any previous related experiences to stand in the way as obstacles. This will be a very
much effective way in adapting to target country’s culture by adding fresh blood to company
process. Also young and innovative ideas would be promoted by these activities. As an
example in garment industry, taste and style that is mostly preferred by the locals is known
by the locals themselves. Another point to extract from Sony is that a past chairman of
French Electronics Industry Association was selected as the president of Sony France. This
not only gave support to capture the market as he was already on the same field of business
but it also enabled the customer base to think that one of them was on the leadership. This
will be a very clever point for us to take when we try to adopt these strategies in the local
context.
But in certain cases, like opening operations in Peru, Sony faced the difficulty of
communication barrier. This was something that should have been identified before going
for the same location, at a crucial time, where it would have been better if a location with
different circumstances were identified. But anyway the company employees were motivated
and courageous enough to get adapted to the situation by going the extra mile of learning the
language by working long hours. Therefore set-backs such as this could occur in course of
actions, which should ideally be avoided, but if occurs should be handled through giving
proper training and motivational encouragement to the employees.
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 9

Leading strategies
Simply put, leading is establishing direction and influencing people to follow that
direction. Three basic leadership skills are at the core of identifying and solving people
problems:
1. Diagnosing, or gaining insight into the situation a manager is trying to influence
2. Adapting individual behavior and resources to meet the needs of the situation
3. Communicating in a way which others can understand and accept
When Sony decided to make its presence in the international market in order to become a
world-renowned brand name, first thing they did was to carry out a thorough research to
identify the potential regions that they could establish offices to carry out their international
operations. Leadership of Sony Corp. had established a strong direction, which was to be
successful in the global arena as a market leader.
First thing they did was to recruit right people for the job. At the beginning they recruited
personnel with overseas sales experience from local trading firms. They were given full
authority, responsibility, backing up and required motivation to carry out their tasks. For
example when members of the International Division went on business trips to overseas to
establish local distribution channels and conduct market research they were given much
recognition by listing their names in the “Overseas Travelers” column of company’s weekly
news letter.
Another important attribute of the Sony’s leadership was that they knew how to get the
maximum out of its employees and motivate them to work towards to achieve company
goals. Sony leadership had excellent people skills and had a great deal of faith in its
employees. For example newly recruited employee Unoki was assigned to find potential
distributor in African region, shows how much faith Sony had in its employees. He was given
full freedom to carry out his market research and take decisions accordingly.
This is one of the important things that can be learned from the Sony Corporation’s
success for the local Sri Lankan companies. Successful leader is a person who can influence
people to follow direction rather than giving out orders.
Sony emphasized on the performance of the employees rather than the seniority. Even if
they are young and less experienced, they were given major roles to play in establishing new
markets in overseas once they have seen the true potential of the employees. Assigning
Tamiya, who was relatively inexperienced employee to establish a subsidiary company in
Hawaii to be operated independently, can be taken as a good example of Sony’s faith on
performance rather than the experience. As Sony made it clear that they are ready to give
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 10

young and inexperienced employees a chance if they are promising, there were quite a
number of rising stars. Young employees felt that there is an equal opportunity for everyone
so that they were highly motivated to carry out their duties.
Adapting to individual behavior and resources to meet the needs of the situation is one of
the key attribute of leadership. Sony had excellent leaders who processed the above skills to
penetrate the foreign markets. When Sony built its plant in San Diego they started to hire
local staff, who were inexperienced and unbiased people. As Sony knew how American
employees behave, they knew that people who had experience with U.S. TV manufactures
might become an obstacle when introducing innovative production system. They hired
Americans for the position of production manager and human resource manager to mix the
US- Japanese management team in order to get the maximum productivity out of the new
plant.
When Sony faced with training and quality control issues with the local employees in US,
they come up with a strategy to overcome those issues by introducing new incentive system
to encourage employees to improve their skills in order to achieve high quality products.
They were able to maintain high quality by maintaining the high moral among the employees.
That shows Sony’s ability to influence its employees to work towards achieving the goal.
They were able to reduce the employee turnover rate by making the workplace a comfortable
area by encouraging employees to freely exchange ideas.
Sony always allowed its employees to express their ideas and most often communication
was two way rather than just employees following orders. For example when Idei realized
that it’s impossible to gain access to the market in France due to the strict restrictions on
imports, he suggested that by establishing a plant, they would be able to get the backing from
the government and be recognized as a good citizen in the business community. As a result of
that Sony decided to construct an audio cassette tape plant which led to the success in Sony’s
presence in Europe.
Sony was fortunate to have a leadership that was bold enough to take enormous risks that
would take the company on the right direction. There wasn’t any hesitation shown in this
regard. Morita’s suggestion of importing products from the U.S. can be seen as one of the
bold steps taken by Sony that paved the way to securing not only Sony future but also the
manufacturing community in whole of Japan by avoiding a rise in protectionism in U.S. and
Europe.
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 11

Controlling strategies
Organizational control refers to the systematic process of regulating organizational
activities to make them consistent with the expectations established in plans, targets, and
standards of performance. As summarized by Douglas S. Sherwin, The essence of control is
action which adjusts operations to predetermined standards, and its basis is information in the
hands of managers.
Lack of effective control can seriously damage an organization’s health, hurt its
reputation, and threaten its future. We can explain the importance of the controlling by taking
one single example; just consider the current crisis the world the motor company Toyota
currently is facing. Further consider Enron, which was held up as a model of modern
management in the late 1990s but came crashing down a couple of years later. Though
numerous factors contributed to this shocking collapse of Enron, including unethical
managers and arrogant, free-wheeling culture but it ultimately comes down to lack of control.
In the local aspect a best suited example is the Ceylinco group down fall.
In the case of Sony globalization the management of Sony was careful enough or smart
enough to keep their control over every stage of the process that is before, during and after.
These three steps also called feed forward, concurrent, and feedback. When we analyze
Sony’s controlling techniques at stages of globalization following can be identified.
Feed forward control is the control that attempts to identify and prevent deviations before
they occur. At the beginning of Sony’s globalization they identified what kind of people they
want. It clearly shows from their advertisement that read “We need people who speak
English and who know the market as soon as possible”. And in another time they did not
want to hire people who have experience purely because of their less adaptability to Sony’s
methods and procedures. They hired right people for the right job most of the time; this is
proven by Unoki’s hiring. Further when they come up with a new design they first check it in
the local market (in Japan) before introducing it to the other foreign markets.
These could be good methodologies to follow when our potential local companies when
becoming globalized. For an example companies like “Siddalepa”, Damro, Lanka Tiles,
Royal Ceramic and Maliban can adopt the same. Most of the times these companies tend to
send their senior staff to promote or to establish new business in abroad. Sometimes they do
this as a gratitude for their senior staff. But it would be better if they can come out from that
mind-set and send right people for the right job irrespective of their seniority and only based
on their capabilities or talents. Because sometimes senior people will try to adapt what they
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 12

are familiar doing in every market where that might not suit all the markets. They also can
test their products in local markets before sending to other countries.
Concurrent control is the control that monitors ongoing employee activities to ensure they
are consistent with performance standards. In the other hand solves problems as they happen.
Once Sony Corporation was faced with a situation of staff not working on the same job for a
long enough period to get an understanding and improve their skills. They came up with a
solution as to increase the salaries depending not only on their performance but on their
seniority level as well. This motivated the employees to continue their job for longer periods,
as the management wanted. For example a leading multinational company in Sri Lanka won
a project in Republic of Maldives. To win this project they had to form a consortium with
two local companies. These two companies were supposed to handle logistic and civil scope
of the project. The Sri Lankan Company was the main contributor of finance. The operation
manger was appointed from one of these local companies and monitoring was done by
frequent visits to Male. They did the mistake of not sending their own person to overlook the
operation that lead to immature termination of contract, which also resulted of suffering a
financial setback. In the second phase of the project they learned from the mistakes and were
careful enough to appoint an operations manager from Sri Lanka and subsequently completed
the task without any setbacks. If they had had adhered to the Sony’s policy of sending their
people to overlook distributors they wouldn’t have to suffer any setbacks.
Feedback control focuses on the organization outputs in particular, the quality of the end
product or service. Sony’s employees were trained to provide feedback to the mother
company regularly and they were encouraged to do so on each chance they get. At that time
with the limited recourses even they made it a point to send their feedback to the company
even though sometimes it was limited to one way communications. When considering
Iwama’s words, “Quality comes before cost” and “We have to maintain high morale among
our employees to maintain high quality” would reflect the emphasis given to quality by Sony.
When our local companies try to sustain in the global market it is essential to get frequent
feedback on their products in these particular markets. For an example if Royal Ceramic
goes to European market, to survive there they have to maintain a proper feedback system.
Lanka tiles are currently exporting their products to few countries in sub continent as well as
out of the sub continent but these operations are only through dealers for a long period. But it
can be seen that though they have good demand for some of their designs in these countries
availability is not always good. This is mainly because they do not get first hand information
on product demands due to lack of feedback.
MANAGEMENT PRACTICES OF SONY FOR LOCAL INDUSTRIES 13

Therefore all in all, these key management functions related strategies adopted by Sony
could be used in the potential industries of Sri Lanka to reach and sustain its market in the
global context. Considering the potential that is seen from our local managers who are very
much keen on achieving the best to our country we do believe it is not an unachievable hurdle
for Sri Lankans and these helpful studies like the success story of Sony Corporation, would
definitely help us in achieving this.

References

Sony Global (2010)- Sony Coperation .Retrived from Sony coperation

Sony Coperation. (2009). Csony Coperation. Retrieved 2010, from http://www.scribd.com:
http://www.scribd.com/doc/22397054/15956049-Sony-Corporation

Damro Sri Lanka. (2010). Damro Sri Lanka. Retrieved from Damro Sri Lanka:
http://www.damro.lk/