sony opzet rapport
TRANSCRIPT
-
8/19/2019 Sony Opzet Rapport
1/186
Consultancy report
THE ULTIMATE EMERGING
MARKET FOR SONY CORP.Ria van der Veen JANUARY 2016
-
8/19/2019 Sony Opzet Rapport
2/186
2
-
8/19/2019 Sony Opzet Rapport
3/186
THE ULTIMATE EMERING MARKET
THE ULTIMATE EMERGING
MARKET FOR SONY CORP.Consultancy report
Ria van der Veen
Commercial Economics, Class X
Studentnumber: 500663797
Department New Business Part of Sony Corporation
Amsterdam, 21st January 2016
msterdam University of
pplied Sciences
-
8/19/2019 Sony Opzet Rapport
4/186
4
-
8/19/2019 Sony Opzet Rapport
5/186
THE ULTIMATE EMERING MARKET
ACKNOWLEDGEMENTIn your living room, bedroom, and office or perhaps in your
hand right now – there’s a good chance that you are in
possession of a Sony smart device. And if you don’t own a
Sony item right now, probably you have ever owned one – for
example one of the first Walkman’s. Although many peopleown a Sony product, the company has been through some
tough years. The consultancy report is the result of extensive
research and is written by Ria van der Veen, a second year
student at the Amsterdam University of Applied Sciences.
The reason for writing this consultancy report is to find the
ultimate new export market for Sony Corporation. The
objective is to discover the most interesting emerging market,
which earns the strategic focus of Sony in the coming five
years. A prosperous market where people have the wealth
that they can buy luxury items. A market where people can
work on self-development by purchasing product that express
their identity. Ultimately, the corporate objective is of great
importance: “Profit generation and investment for growth”.
This report is written with the intention to contribute to this
goal.
Writing this report is a great opportunity that allows me to
continue to develop as a future marketer. I have taken efforts
in this project. However, it would not have been possible
without the kind support and help of many individuals. I would
like to extend my sincere thanks to all of them. I would like to
express my special gratitude towards Mr Zouhair ben
Abdelkarim and Mrs Ria van Kempen for their supervision and
kind co-operation when needed. I also want to thank my
partner for his keen insights and support when I didn’t know
how to proceed. With this help, I have managed to complete
this consultancy report.
Enjoy reading this consultancy report!
With kind regards,
Ria van der Veen
-
8/19/2019 Sony Opzet Rapport
6/186
6
-
8/19/2019 Sony Opzet Rapport
7/186
THE ULTIMATE EMERING MARKET
Executive Summary 9
Pre face 11
1. ABOUT SONY 13
2. PRE-FILTER ANALYSIS 21
3. ROUGH SCAN 29
4. DETAILED SURVEY 37
5. MALAYSIA [ DESTEP / 6D MODEL / MABA ] 45
6. MEXICO [ DESTEP / 6D MODEL / MABA ] 53
7. BRAZIL [ DESTEP / 6D MODEL / MABA ] 61
8. MALAYSIA [ DESTEP / 6D MODEL / MABA ] 69
9. ADVICE & STRATEGY 79
Conclusion 85
References 87
Appendices 91
I. COUNTRY SELECTION MODEL 93
II. PRE-FILTER CRITERIA 94
III. COUNTRY PROFILES: PRE-FILTER 97
IV. PRE-FILTER EXCEL 108
V. OVERALL RANKINGS PRE-FILTER 109VI. ROUGH SCAN CRITERIA 110
VII. COUNTRY PROFILES: ROUGH SCAN 113
VIII. ROUGH SCAN EXCEL 119
IX. OVERALL RANKINGS ROUGH SCAN 120
X. DETAILED SURVEY CRITERIA 121
XI. COUNTRY PROFILE: DETAILED SURVEY 124
XII. DETAILED SURVEY EXCEL 130
XIII. DESTEP MALAYSIA 131
XIV. DESTEP MEXICO 140
XV. DESTEP BRAZIL 148
XVI. DESTEP CHINA 159
XVII. 6D MODEL & CULTURAL HABITS 170
XVIII. MABA FILTER CRITERIA 182
XIX. MABA COMPLETE EXCEL 184
XX. SUBQUESTIONS & RESEARCH QUESTIONS CONSULTANCY REPORT 185
-
8/19/2019 Sony Opzet Rapport
8/186
8
-
8/19/2019 Sony Opzet Rapport
9/186
THE ULTIMATE EMERING MARKET
EXECUTIVE SUMMARYOne of Sony Corporation’s objectives is “expand the business in the
emerging markets”. Therefore Sony asked us to gain insight into the
main emerging markets and to provide an advice concerning in
which main emerging markets Sony Corporation should concentrate
their sales efforts in the next five years.
The first chapter contains a brief introduction into Sony Corporation.
In addition to the financial corporate objectives, the company
attaches great value to the environment and has special objectives to
support the environment. Secondly, we gained more insight in the
productrange of Sony by investigating the marketing mix of Sony. We
learned that Sony definitely earned its innovative character, with the
development of the Walkman, SmartWatch, BRAVIA TVs, Xperia
Tablets and smartphones and Cybershot camera’s.
Although Sony is a very innovative company, it has been through
some tough years. Therefore they asked us to write this consultancy
report. This report provides an analysis of 23 emerging markets and
eliminates the countries which doesn’t form an interesting market to
entry for Sony Corporation. The evaluation of multiple macro-
economic market details has made it possible to clearly distinguish
the countries from each other. In the first phase – the pre-filter
analysis – the first thirteen countries were eliminated. High taxes and
import duties and restrictive measurments are for example filter
criteria in this first phase of the model.
The top ten remaining countries are furtherly elaborated in the rough
scan – the second phase of the Country Selection Model. Multiple
economic and govermental criterions are used to survey the
countries background to determine if it might be an interesting new
market for Sony Corporation. A destabalized government of a low
prosperity level might indicate that this isn’t the case. In this stage we
bid farewell too Poland, Hungary, Turkey, Uruguay, Russia and
Belarus. The countries China, Mexico, Brazil and Malaysia move on to
the final stage of the Country Selection Model: the Detailed Survey.
-
8/19/2019 Sony Opzet Rapport
10/186
10
In the detailed survey the attention is focussed on
the consumer electronics market within the
country. Secondly we consider the environmental
performance of the country and possible trade
promotions which could make it more attractive to
expand the Sony market for smart devices to this
country. A dropping economy for Brazil or a low
score on the Environment Performance Index for
China – it could imply that the country isn’t that
interesting for Sony. But before we can make such
a statement, each of the four remaining countries
is examined individually with a DESTEP analysis, a
cultural analysis with the Six Dimension Model
and a MABA analysis.
Although all countries are located in the “green”
area of the MABA analysis, there are considerable
differences. The Chinese market is enourmous,
but we also learned that there is more demand for
domestic products and there is a strong mutual
hatred between Japan and China. The Mexican
strategy following the Country Selection Model is
the “protect position” strategy, but it is also a
country with a major corruption problem. The
relatively small Malaysian market scored
predominantly positive – also in the different
stages of the Country Selection Model – but
investment is necessary to realise growth
(strategy: build selectively). Brazil is characterized
with a dropping, but tremendous market.
Although the country seems to be very interesting
on first sight with for example the Olympics 2016
coming up, it isn’t an interesting market
economically seen.
In the last chapter one of the four above-
mentioned countries is selected for furtherelaboration. We provide Sony with an strategic
advice for how to expand their market in the last
remaining emerging market. Which country
should it be? Malaysia, Brazil, China or Mexico?
You’ll find out in chapter nine, starting at page 79.
-
8/19/2019 Sony Opzet Rapport
11/186
THE ULTIMATE EMERING MARKET
PREFACEOn April 1, 2012 Kazuo Hirai became President and CEO of Sony Corporation, succeeding
Sir Howard Stringer. In the years before Sony’s operating results, particularly in the
electronics business, were negatively affected by the Great East Japan Earthquake and the
2011 Thailand floods. Conditions were exacerbated by the economic downturn across the
developed world, which caused other currencies to fall in comparison with the persistently
strong yen. Owing to reduced sales in the consolidated sales and operating revenue for
the period declined 9,6%. Sony recorded an operating loss of 67,3 billion yen, compared
to the 199,8 billion yen of operation come recorded in previous fiscal year. In order to
swiftly rebuild and restore the Sony Group, Sony introduced in 2012 a new top
management structure aimed at accelerating decision-making and strategic executing1.
Sony Corporation, commonly referred to as Sony, is a Japanese corporation
headquartered in K!nan Minato, Tokyo, Japan11 . Its diversified business is primarily
focused on the Consumer and Professional electronics with divisions Gaming,
Entertainment and Financial services sectors 1 . The company is one of the leading
manufacturers of electronic products for the consumer and professional markets1. Sony is
ranked 116th on the 2015 list of Fortune Global 5001.
Sony Corporation is the electronics business unit and the parent company of the Sony
Group, which is engaged in business through its four operating segments – Imaging
Products & Solutions Sector, Pictures Entertainment, Music Entertainment and Financial
Holding Group 1 1 . These make Sony one of the most comprehensive entertainment
companies in the world.
Problem definition
This report contains an analysis from 23 to 10 countries and finally an advice with four
potential emerging and thereby lucrative markets. The final chapter concentrates on the
strategic focus of Sony and positioning in the selected country. Unless the changes in
previous years, the 2014 forecast is significantly below the financial targets we announced
in April 2012. After a net loss of 170 billion yen for fiscal year 2014 and eliminating
dividends for this year, Sony couldn’t meet shareholders expectations. Financial targets
Sony established may not have been suitable, and that they likely did not implement
sufficient cost reduction measures. Sony recognized these missteps and has worked toaddress the issues that hinder Sony’s fundamental transformation1.
Progress is necessary, however, in order to rediscover growth and discover emerging
markets. To achieve growth in the next five years, Sony invited us to update their country
analysis of the main emerging markets. With the economy becoming more and more
competitive with each passing day, having appropriate knowledge about the concerns and
preferences of your customers and become integral for any business, is essential. Business
market research not only identifies new business opportunities and changing market
trends, it also recognizes new areas for expansion, and increases your customer base. This
report contains recommendations concerning markets Sony should concentrate their salesefforts in the next five years.
-
8/19/2019 Sony Opzet Rapport
12/186
12
Main research objective
Gain insight into the main emerging markets (four countries) for Sony Corporation and to
provide our advice concerning in which main emerging markets Sony Corporation should
concentrate their sales efforts for smart devices on in the next five years.
Problem Statement
“Which country forms the most interesting emerging market for Sony Corporation and
where should Sony concentrate their sales efforts for smart devices in the next five years?”
Sub-questions
1. What is Sony’s business profile?
2. Which 13 countries will be eliminated of the list of potential interesting markets?
3. Which ten countries will be comprehensively researched and form an interesting
market?
4. In which four countries should Sony concentrate their sales efforts in the next five
years?
5. Which country should have the strategic focus of Sony and how should they
prioritize the strategic focus of Sony over the key industries?
To answer the main question and the sub-questions, we used the country selection model.
We did a lot of desk research to gain insight into the possible emerging markets for Sony
Corporation. After the pre-filter analysis, were another ten countries left. The rough scan
includes a more extensive form of desk research and eliminated another six countries of the
list. With four interesting emerging markets left, the detailed survey is the last step to be
taken. With this finished, a recommendation for most interesting emerging market for Sony
Corporation follows. Exclusively for this country the last sub-question will be answered. The
result: a specified recommendation regarding one country regarding the recommended
strategic focus for Sony Corporation.
This advisory report is submitted on the 21st of January 2016 to the board of directors of
Sony Corporation and the Hogeschool van Amsterdam.
Sources:1 "Letter to Stakeholders, Annual Report 2012." (PDF). Retrieved 22 November 2015.
1 "Access & Map." Sony Global. “1-7-1 Konan Minato-ku, Tokyo 108-0075, Japan”. Retrieved 22 November 2015.
1
"Sony Global - Corporate Information." Retrieved 22 Novemer 2015.1 "Consolidated financial results for FY2014, Sony Corporation." (PDF).
1 "Sony Corporate History." Retrieved 22 November 2015.
1 "Global 500 - Fortune" Fortune. Retrieved 22 November 2015.
1 "Organization Data." Retrieved on 22 November 2015.
1 "Business Overview, Annual Report 2013." PDF). Retrieved 22 November 2015.
1 "Sony Mid-Term Corporate Strategy for FY2015 - FY2017." Corporate Info News Releases. Retrieved on 22 November 2015.
-
8/19/2019 Sony Opzet Rapport
13/186
THE ULTIMATE EMERING MARKET
1 ABOUT SONY
-
8/19/2019 Sony Opzet Rapport
14/186
14
-
8/19/2019 Sony Opzet Rapport
15/186
THE ULTIMATE EMERING MARKET
1. ABOUT SONY
Sony Corporation , commonly referred to as Sony, is a Japanese corporation headquartered in K!nan
Minato, Tokyo, Japan12. Its diversified business is primarily focused on the Consumer and Professional
electronics with divisions Gaming, Entertainment and Financial services sectors3. The company is one of
the leading manufacturers of electronic products for the consumer and professional markets 4. Sony is
ranked 116th on the 2015 list of Fortune Global 5005
. In this chapter, the following sub-question will beelaborated: “What is Sony’s business profile?”.
1.1 Mission Statement, Vision, Corporate Objectives
Mission statement6
At Sony, our mission is to be a company that
inspires and fulfils your curiosity. Our
unlimited passion for technology, content and
services, and relentless pursuit of innovation,
drives us to deliver ground breaking new
excitement and entertainment in ways that
only Sony can. Creating new cultures and
experiences.
Everything we do is to move you emotionally.
Be Moved.
Vision7
Sony is striving to achieve a zero environmental footprint throughout the entire product life cycle. The
ultimate goal of “Road to Zero” inspires our imagination, innovative technology and also your curiosity.
Our unique environmental initiatives are expanding around the world as we continue down the Road to
Zero.
Corporate objectives8
Sony is setting “profit generation and investment for growth” as the theme of its mid-range corporate
plan from fiscal year 2015 through fiscal year 2017. Therefore, the corporates objective is to transform
the Sony Group into a highly profitable enterprise with a growing market share.
Long-term objectives
Sony’s first long-term goal is to achieve zero carbon by 2015. For example: the BRAVIA range of TV’s
introduced by 2010 had a strong focus on eco credentials.
1 "Access & Map." Sony Global. “1-7-1 Konan Minato-ku, Tokyo 108-0075, Japan”. Retrieved 22 November 2015.
2 "Sony Global - Corporate Information." Retrieved 22 Novemer 2015.
3 "Consolidated financial results for FY2014, Sony Corporation." (PDF).
4
"Sony Corporate History." Retrieved 22 November 2015.5 "Global 500 - Fortune" Fortune. Retrieved 22 November 2015.
6 "Mission Statement." About Sony. Retrieved 22 November 2015.
7 "Vision." Sony and the Environment. Retrieved 23 November 2015.
8 "Objectives." “Profit generation and investment for growth”. Retrieved on 23 November 2015.
-
8/19/2019 Sony Opzet Rapport
16/186
16
The second long-term objective of Sony Corporation is to be the leading provider in the electronics
industry and to maintain its core market segment by developing ground breaking products, services
and technologies.
Short-term objectives
The corporate strategy of Sony announced by NEW CEO Kazuo Hirari as of 2012 is “One Sony” – an
integrated new management approach to accelerate all the decision-making in the entire company. The
new approach marks the beginning of a transformation aimed at driving growth and creating newvalue9.
This includes five initiatives:
1. To strengthen the core business areas in the market;
2. Target to rebuild the television segment to the growing and ever changing technology market;
3. To expand the business in the emerging markets;
4. Creating the new business and accelerating innovation;
5. Realizing the business portfolio and optimizing resources.
Corporate Social Responsibility (CSR) at Sony 10 It is the core corporate responsibility of Sony Group to the
society to pursue its corporate value enhancement through
and sound business practice.
Sony’s corporate social responsibility (CSR) activities reflect its
philosophy of implementing sound business practices;
innovating to realize products, services and content that
inspire and excite; assisting the communities in which we
operate; and helping to shape a better, more sustainable
society. Sony believes that these activities both benefit societyand enhance corporate value.
1.2 The Marketing Mix
Product
Sony’s product portfolio exists of eight different product groups: Consumer Electronics, Mobile, Game,
Movie, Music, Network Services, Financial Services and Professional Services. In this sub chapter a short
summary of the consumer electronic products Sony produces, such as smartphones, tablets, smart TV’s
and other smart devices. Sony’s electronic products and services are marketed throughout the world
under the trademark “Sony”.
Sony is a renowned multinational company and known for its quality products. This report is about
finding a lucrative emerging market for the product category ‘Smart devices’. It is all about creating
inspirational, innovative and high quality products with unimaginable possibilities. A consumer used to
need at least 50 devices to do the same things as what they can do with their smart device: phone, mail,
map, alarm, camera, radio, CD-player, television, video store, games, newspapers, computer, watch,
clock, pen, notebook, pedometer, sport instructor, calculator, thermometer, mobile banking… and the
list goes on and on. Everything is possible with a smart device.
9 "Corporate Strategy." Sony Corporation. Retrieved on 4 January 2016.
10 "CSR at Sony." Annual Report 2013. Retrieved on 23 November 2015.
-
8/19/2019 Sony Opzet Rapport
17/186
THE ULTIMATE EMERING MARKET
Consumer Electronics11: Mobile, Tablets & Smart Devices12
Sony developed the iconic Walkman and they gave us the freedom to enjoy music easily whenever and
wherever we pleased. In current age Sony Walkman Series has evolved in not only a wireless but also a
waterproof music sensation.
As one of the first companies in the world – innovative they are – Sony developed a SmartWatch for an
affordable price and compatible with all Android devices. Currently their third edition is on the market:
you can talk to it, fill it with music, track your movements and customise it to suit your personal style.
The Sony BRAVIA TVs and matching home theatre systems have been a single-minded quest for picture
quality that captivates and audio with truly realistic presence. The outstanding performance
distinguishes Sony from their competitors.
In the ever-innovative Xperia line, there’s a new Xperia Z smartphone and tablet . Shaped like a simple,
exquisite bar and slate, they reflect a future of greater freedom.
“Cyber-shot” T series is a follow up on the innovative first edition Cyber-shot camera. The idea: a
compact and slim body, stylish device with the ultimate high-resolution camera with the unique Cyber-shot technology of Sony.
Next to above-mentioned products offers Sony a wide range of camera’s and lenses, digital paper (such
as eBooks), projectors, Blu-ray Disk & DVD players, audio systems, wireless speakers & speaker docs,
headphones, multiple digital music players, voice recorders, radios & portable CD players. The broad
assortment of Sony exists of video cameras, in-car receivers & players, speakers & amplifiers, portable
chargers, batteries, memory cards & flash drivers, cables and probably much more.
Price
Being a company that emphasizes product quality, it tends to sell its products with price range frommoderately high to high-prices, depending on the use and targeted customers. Their prices most often
match the price ranges their competitors have. We may speak of a competition-oriented price-strategy
but we rather choose the market-oriented price-strategy above that. It is quite possible that Sony keeps
the prices of competitors in mind while determining their prices, but it seems largely a market-oriented
situation, while customers eventually buy the products. It is already hard enough to distinguish the Sony
brand within the wide range of competitive products, so the price should match what the consumer is
willing to pay (market-oriented strategy). The other facets of the marketing mix will have to make the
distinction for the customer.
In the Sony assortment there are multiple cheaper products, but these are almost always related
products. Think of new or better headphones for a new smartphone or lenses for a camera and
videogames for the PlayStation.
Place
Sony has an online presence in several formats, for example their own website provides information on
products and their prices. The products are registered in 204 countries and territories around the globe.
Sony Corporation itself has more then 30 subsidiaries companies in Japan itself and more than 50
affiliated companies outside of Japan. Most of the sales come from third party stores and websites, such
as Amazon, Best Buy and Saturn.
11 "Consumer Electronics." Retrieved on 23 November 2015.
12 "Sony new product releases." Sony Corporation. Retrieved on 4 January 2016.
-
8/19/2019 Sony Opzet Rapport
18/186
18
Wholesale distributors of Sony Products include but are not limited to: Best Wholesale co. Ltd,
Dongsheng International Trade Co. Ltd, Denzuke Network Sdn. Bhd., Front-Page Trade Co., Ltd.
Promotion
Sony employs an umbrella branding strategy by placing the product name along with corporate name.
This strategy lets the product to assume its own identity and positioning, but also draws strength of the
corporate brand. The goal is to bolster consumer confidence in the product. Sony has used this strategy
to launch new products.
In February 2013, Sony has introduced a new strapline, ‘Be Moved’, as it seeks to align its marketing into
the group’s overall communications strategy. The new ‘Be Moved’ line will be used as a “long-term
campaign platform” to better fit with the company’s wider ‘One Sony’ strategy, which is centred around
three core pillars of mobile, gaming and digital imaging13.
Sony actually outspends their competitor’s big time in advertising and it appears to be working to some
degree. Promotion usually empowers the viewers and shows them what Sony products will feel this way.
Advertising14 Advertising is any paid form of non-personal mass communication through various media to present
and promote products, services and ideas by an identified sponsor. So far, SONY has advertised its
products through many different ways and media. Through TV we have seen multiple advertisements of
its products such as BRAVIA televisions. Sony also advertises its products by targeting those favourable
television programs, like sports, series and movies. For example, Sony products are used in the latest
James Bond movie ‘Spectre’. This is called product-placement.
Sony used direct response advertising. This is a type of advertising that encourages the consumer to
response either by telephone, mail or the Internet. Such advertising is done through direct mail of
catalogues / physical advertisements in magazines.
Sales Promotion
An other strategy of Sony is Sales Promotion: a marketing discipline that utilizes a variety of incentives
techniques to structure sales related programs targeted to customers, trade and/or sales levels that
generate a specific, measurable action or response for a product or service. For example after the
release of the Sony BRAVIA television sets, Sony promoted them by early bird prizes by saying that all
BRAVIA full HD LCDTV’s purchased during July 2008 and registered within two weeks of purchase
qualify for a Bonus PlayStation 3 as long as the customer claims one of the first 35,000 received and
validated by Sony.
Public Relations and Publicity
Public relations is a broad set of communication activities employed to create and maintain favourable
relationship with employees, shareholders, suppliers, media, educators, potential investors, financial
institutions government agencies and officials and society in general. Through its website, Sony
Corporation has its provided contacts for those customers who will be in need of any information from
the company. In this way Sony can create a mutual relationship with its customers and ensure that it
serves the wished and demand of its customers.
13 "Introducing Be Moved as the new companies strapline." MarketingMagazine.co.uk. Retrieved on 4 January 2016.
14 "Promotion." Sony Group. Retrieved on 4 January 2016.
-
8/19/2019 Sony Opzet Rapport
19/186
THE ULTIMATE EMERING MARKET
Sponsoring
Sony was sponsoring huge sport-events, such as the World cup in Brazil in 2014 and other FIFA related
football events, as Sony is a FIFA-partner. At the end of 2014 Sony stopped sponsoring FIFA in response
to growing concerns about the transparency of the bid procedure around the World Cups of 2018 and
2022.
Sony has a partnership with The Olympic Games. The next event will take place in Brazil in 2016.
Process15
The company’s focus on tis research and development (R&D) activities is evident in its expenditure of
over $5 billion in 2009. The strong focus on R&D helped the company to launch technologically
innovative product in the market. The strong focus on R&D would thus enable the group to revive its
product base as needs are indicated by customers. Examples of this strategy include the introduction of
BRAVIA, Cyber-shot cameras and the Xperia smartphone and tablet series.
Sony operates from a philosophy it labels “uniquely Sony”. The company seeks to facilitate the
development of its staff but spurs employees to manage their own career and but to avoid
pigeonholing. This is a microcosm of the company’s desire to foster adaptability. The company’s broadoutlook extends to its corporate responsibility.
The desire to make its hardware and interfaces that are easy to use was a catalyst behind recent
reorganization of electronics into “Personal” and “Home” category user-friendlier. Sony has adopted a
“Company of Committees” governance system in order to go beyond minimum compliance with legal
requirements and to add additional transparency. To accomplish this, the company has revised some
Directors’ functions to facilitate the proper functions of statutory committees.
Sony has recently reorganized in order to further improve responsiveness and Customer Services, Inc.
and has initiated special employee training to enhance its ability to respond to customer’s inquiries andrequest. Sony seeks to in still corporate social responsibility policies throughout its supply chain.
People
Kazuo Hirai is the Chairman, CEO and President of Sony Corporation. He stands at the head of a more
than 130.000 employees-company.
In 2008, the company created 13 global talent directors who are assigned to identify promising
individuals in all businesses and regions and develop them into future business leaders. This initiative
also includes a schedule of job assignments designed to give them exposure to a variety of businesses
and regions16.
15 "Process" Marketingteacher.co.uk. Retrieved on 4 January 2016.
16 "People" Marketingteacher.co.uk. Retrieved on 4 January 2016.
-
8/19/2019 Sony Opzet Rapport
20/186
20
-
8/19/2019 Sony Opzet Rapport
21/186
THE ULTIMATE EMERING MARKET
2PRE-FILTER
ANALYSIS
-
8/19/2019 Sony Opzet Rapport
22/186
22
-
8/19/2019 Sony Opzet Rapport
23/186
THE ULTIMATE EMERING MARKET
2. PRE-FILTER ANALYSIS
On April 1, 2012, under the leadership of President and CEO Kazuo Hirai, Sony announced “One Sony”:
an integrated new management approach designed to accelerate decision making across the entire
Sony Group. The new approach marks the beginning of a transformation aimed at driving growth and
creating new value. This section provides an overview of the five key initiatives Sony is undertaking to
revitalize and faster growth in the electronics business.
Alongside internal changes, Sony asked us to update their country selection to discover new main
emerging markets. In this first chapter 13 countries are eliminated from the list of 23 possible markets
with help of the Country Selection Model. In this section the following question will be answered: “Which
13 countries will be eliminated of the list of potential interesting markets?” The applied filter criteria are:
Import Restrictions, Distance in KM, World Risk Index, Travel Advice, Import Duties, Sales Tax and the
Gross Domestic Product, Purchasing Power Parity.
We start this chapter with a brief explanation of the Country Selection Model. This elucidation won’t be
repeated in the following two chapters.
2.1 The Country Selection Model
The Country Selection Model is a three-phase filter-model. In every phase of the model, a number of
countries are eliminated from the list of potential emerging markets. Finally four potential lucrative and
thereby emerging markets are left over. In this chapter the first stage of this model will be worked out.
To create a new ranking in the list of 23 countries and eliminate 10 countries in the first phase and
another nine in the second, a weight is provided to every filter criteria. The weight determines in what
degree the found data will count. Do this for all the criteria and multiply this with the ranking number to
create a weighted score. For every filter criteria the interval borders of the rankings have to be defined:
from one (lowest score possible) to five (highest score possible). The weighted score and the new
ranking are a result of the weight multiplied with the score awarded to the filter criterion. The overall,
weighted scores of the countries could be compared now. The comprehensive list of criteria with
corresponding weights and rankings can be found in Annex I “The country selection model explained”
on page 93.
2.2 The Pre-filter analysis
Pre-filter Analysis: the criteria
To separate the wheat from the chaff, this first phase of the Country Selection Model is carried out. The
detailed elaboration can be found in Annex II “Pre-filter analysis: the criteria” on page 94. In this
paragraph short description and motivation of the chosen filter criteria:
• Import restrictions (weight 0,15)
• Distance in KM (weight 0,05)
• World Risk Index (weight 0,25)
• Travel advice (weight 0,20)
• Import duties & Sales tax (weight 0,20)
• Gross Domestic Product, Purchasing Power Parity (weight 0,15)
-
8/19/2019 Sony Opzet Rapport
24/186
24
Restrictions on imports generally take two forms: tariffs and quantitative (non-tariff) barriers. These
restrictive measures are imposed by – for example the European Union – and with a lot of measurements
a country might acquire the “sanction country” or “high-risk-country” status. The consequence of
violating the rules by doing business with a sanction country could result in high amount fines. In
addition, it is still questionable whether you as a company want to do business with a country where
human rights are infringed. Secondly, the World Risk Index is a list of countries, ranked on the risk of
becoming a victim of a disaster as a result of vulnerability and natural hazards such as earthquakes,
storms and floods. A high risk also means an increased risk of higher costs due to damage. This is alsoapplicable to the travel advice: the Dutch government provides for every country a travel advice for its
residents. An unfavourable recommendation may have to do with the political situation in the country,
but also with the risk of natural disasters.
Thirdly, sales tax and import taxes are important because it indirectly increases the cost of each product,
or reduce the margin on a product. At a higher selling price it’s likely that there are fewer candidates for
the product. In both cases, high taxes will thus go at the expense of the Sony’s profits. The same applies
for the distance to be covered between the production location and potential sale location. The bigger
the distance, the higher the costs will be.
Last but not least an economic factor: the Gross Domestic Product, Purchasing Power Parity. The GDP
PPP conversion factor is the number of units of a country’s currency required to buy the same amounts
of goods and services in the domestic market as US Dollar would buy in the United States. A higher GDP
PPP might indicate greater spending power.
Pre-filter Analysis: the elaboration
This section summarizes the findings from the first phase of the Country Selection Model, the Pre-filter
analysis. Full data from the study and a complete overview per country can be found in Annex III “Pre-
filter analysis: full data” starting on page 97. This section mainly includes interesting facts and figures
plus supporting graphs and tables. As explained previously, the final ranking is calculated according tothe scores given in the Country Selection Model.
Import restrictions
China is a sanction country, but nevertheless this
doesn’t form a threat for Sony since it concerns an
embargo on arms. In Russia, on the other hand, a
whole lot import restrictions are in force, including
an embargo on dual-use goods and technology (if
intended for military use and certain persons,
entities and technology). This measurement will
probably apply to Sony Corporation, as Sony offers
a wide range of technology products. The same
thing goes up for Belarus, which is also a sanction
country. Another country in which it applies is
Ukraine, where there is an embargo on dual-use
goods and technology, telecommunications and
more in force.
Indonesia is considered a high-risk country in
connection with the possible violation of human
rights. The same goes for India and Pakistan. In addition to the violation of human rights, a less well-
regulated legislation may occur. Therefore doing business in this country entails a greater risk.
-
8/19/2019 Sony Opzet Rapport
25/186
THE ULTIMATE EMERING MARKET
Egypt is a sanction country and a high-risk country. An important restrictive measure that is applied to
Egypt is the freezing of funds and economic resources. This import restriction won’t probably apply to
Sony products, but it might form a restriction because it influences the overall welfare of the country.
Countries like Iran and Iraq are in state of war. These countries are both are a sanction country and a
high-risk country. Powerful measurements are the freezing of funds and economic resources – which
might lead to sober times – and the embargo on telecommunications and other technological
equipment.
Distance in KM
Hindsight the distance in kilometres has proved to be a less good research factor. True enough this
factor affects the final costs of transportation, but since Sony has an efficient global distribution network
the actual distance in kilometres requires – at most – an increase in the quantities shipped. After all, the
extension of the market share in the concerning country doesn’t call for a specific extension of the
distribution network for this country. Therefore, a low weight is assigned to the degree of importance of
this research factor. Countries that have the lowest score within the country selection model (score one)
are the following: Argentina, Brazil, Chile and Uruguay. Countries for which just a small distance
should be covered are China, Russia, India, Indonesia, Malaysia, Pakistan and Vietnam.
World Risk Index
Countries where the risk is at its highest to become a victim of a disaster as a result of vulnerability and
natural hazards are Chile with 11,20% and Vietnam with 12,89%. Other countries in which there is also a
high risk of becoming a victim are Nigeria with 8,12% and South Africa with 7,43%.
Ironically enough, countries, which are determined as ‘the safest’, following the WRI are almost all
countries where other compelling factors were discovered: Belarus, Poland, Ukraine and Egypt.
Import duties & Sales tax
A high percentage of taxes mean high fixed costs for Sony Corporation. This affects the profit of thecompany. Countries, which charge a high amount of taxes, are Argentina with 16% import duties and
21% sales tax and its practically neighbouring country Brazil also likes to charge taxes. Unfortunately we
only know they charge 16% import duties and a varying amount of sales tax. Nevertheless, Brazil is
assessed with an average score in contrast to Argentina, which is assessed with the lowest score
possible. Also Uruguay is being reviewed as one of the least attractive countries in regarding taxes to
be paid.
Pakistan is ranked on the second level. This country charges a considerable amount to import duties as
well as a varying amount for each imported product. This therefore ensures higher fixed costs per
product and reduces the margin on it. Iran is also ranked on the second level. This country is charging
both import duties and sales tax. The same goes for Nigeria, in where for both sales- and import duties
a 5% fee is charged.
Iraq and Egypt are assessed with the lowest ranking possible. Of these two countries, the charges tax
amounts are unknown. This doesn’t allow Sony Corporation to estimate final costs and therefore isn’t an
interesting country to do business with.
Despite the fact that paying taxes is never nice, there is one country that has received the highest score
(rank five): Malaysia. In this country only 6% sales tax is charges and no import duties.
-
8/19/2019 Sony Opzet Rapport
26/186
26
Gross Domestic Product, Purchasing Power Parity
In order to obtain a good impression of the level of prosperity in a country you can look at the GDP PPP.
India is ranked as one of the four lowest scoring countries, with $5.800. The same goes for Pakistan
with only $4.700 and Vietnam with $5.700. Nigeria also doesn’t form an interesting market with a GDP
PPP of only $6.100.
Countries with a low GDP PPP that are ranked on level two are Egypt ($10.900), Indonesia ($10.700)
and Ukraine ($8.700).
The highest scoring countries – in other words with a high GDP PPP – are Argentina with $23.100, Chile
with also $23.100, Poland with $25.200 and Russia with $24.400. Hungary has a GDP PPP of $25.000
and Malaysia $25.100.
Pre-filter Analysis: “to proceed or not to proceed”
The last section of this chapter focuses on the conclusion of the pre-filter analysis. The complete pre-
filter analysis in Excel format can be found in Annex IV “Pre-filter analysis Excel” on page 108.
The table below shows the total scores in the pre-filter analysis of the country selection model. As statedin the legend, each colour stands for a separate filter criteria. The size of this area reflects the degree of
impact on the final score. The rods also show the individual scores for each criterion in each country.
This table can also be found in Annex V “Overall rankings pre-filter analysis” on page 109.
-
8/19/2019 Sony Opzet Rapport
27/186
THE ULTIMATE EMERING MARKET
The ten highest-scores nations go through to the next stage: the rough scan. This partition is also
displayed in the table above. The most decisive factors for this review have to do with the following
points:
1. Poland: low score on the World Risk Index, only 3,27% risk & and high GDP PPP of $25.200. The
absence of import restrictions is also benefit the country.
2. Hungary: the country with a positive score of three or higher on all criteria. Remarkably is the
relatively high sales tax of 27%, while the country doesn’t charge import taxes. There is no
question of import restrictions and its high GDP PPP of $25.000 characterizes this country in apositive way.
3. Malaysia: One on almost all criteria, high-scoring country is Malaysia. For example, the relatively
short distance from the production location is positive and the fact that the country only charges
6% sales tax. There are no import duties charged because of the Free Trade Agreement (FTA)
with Japan since 2006. The country also has a significant high GDP PPP in comparison to other
surveyed Asian countries. Also, there doesn’t apply import restrictions to this country.
4. Turkey: Yet another average positive scoring country is Turkey. There are no outstanding issues.
5. Belarus: The assessment of Belarus is negatively influenced by the fact that this country is a
sanction country. By contrast, it does have al low score on the World Risk Index with only 3,07%.
In this country a ban on technology products is applied, which makes it directly a non-interestingcountry to do business with.
6. Brazil: This moderately high scoring country – except one: the distance that must be covered – is
characterized by an on the product depending sales tax. This makes it treacherous difficult to
estimate the final costs per product. Also, there doesn’t apply import restrictions to this country.
7. Uruguay: Firstly, the distance of Japan negatively impacts the final score of this country. Secondly
this country charges both moderately high import duties and sales tax.
8. China: The assessment of China is negatively influenced by the fact that this country is a sanction
country. By contrast, the country charges only 17% sales tax and no import duties. In addition,
this country is very close to Japan and a lot of the products are manufactured in China – which
reduces the distribution costs.9. Mexico: Another moderately high scoring country is Mexico. With a ranking of three or higher,
especially the relatively low sales tax of 16% and no import taxes is noticeable. Unfortunately the
distance to be covered, affects the ranking negatively.
10. Russia: The assessment of Russia is negatively influenced by the fact that this country is a sanction
country. In this country a ban on technology products is applied, which makes it directly a non-
interesting country to do business with.
Based on these scores the following top ten with accompanying final score is created:
-
8/19/2019 Sony Opzet Rapport
28/186
28
-
8/19/2019 Sony Opzet Rapport
29/186
THE ULTIMATE EMERING MARKET
3ROUGH SCAN
-
8/19/2019 Sony Opzet Rapport
30/186
30
-
8/19/2019 Sony Opzet Rapport
31/186
THE ULTIMATE EMERING MARKET
3. ROUGH SCAN
The second phase of the Country Selection Model elaborates on the remaining ten countries. For an
explanation of the Country Selection Model, please read the first paragraph of chapter two on page 23.
In this section the countries Poland, Hungary, Malaysia, Turkey, Belarus, Brazil, Uruguay, China, Mexico
and Russia are subjected to in-depth research.
3.1 The Rough Scan
Rough Scan: the criteria
In order to obtain more depth in the
investigation this phase of the country selection
model is conducted. The detailed elaboration
can be found in Annex VI “Rough Scan Criteria”
on P110. In this paragraph short description
and motivation of the chosen filter criteria:
• Political Stability Index (weight 0,15)
• Trade relations (weight 0,20)
• Gross National Income, Purchasing
Power Parity per capita in USD
(weight 0,10)
• Inflation rate (weight 0,20)
• Size of the population (weight 0,20)
• Exports in million USD (weight 0,05)
• Exchange rates yearly in percentages
(weight 0,10)
A destabilized government, poor quality of public and civil formulation and implementation is
something you want to avoid in a time of market expansion for exactly that country. The Political Stability
Index is a sub pillar of the Global Innovation Index and represents the chance one of the above
mentioned risks might occur. Another reason why a politically stable environment is important is the
relation between Japan and the other country. A good relationship means basically a stronger bond
between the two countries and it can also imply other favourable conditions - such as a Free Trade
Agreement - which increases mutual trade. Exports play an important role in the economy, influencing
the level of economic growth, employment and the balance of payments. For example, globalisation
and reduced tariff barriers have all helped exports become a bigger share of the national income.
Secondly, the GNI PPP per Capita in USD is the GNI converted to national dollars using purchasing
power parity rates. It is a suitable criterion to determine whether there is sufficient capital available in the
emerging market you are about to enter. Nevertheless there are many ways to measure the size and
performance of an economy, including the growth or contraction of exchange rates and the inflation
rate of a country. Many governments have a target for a low but positive rate of inflation: a high inflation
could have damaging economic and social consequences, such as a tough financial situation for
businesses. Aside from factors as the GNI PPP and inflation, the exchange rate is one of the most
important determinants of a country’s relative level of economic health which, in turn, is important in
determining whether it is an interesting market or not.
-
8/19/2019 Sony Opzet Rapport
32/186
32
The last criteria chosen is the size of the population. This is in fact equal to the size of the market and
thus potential buyers of the Sony Products. The smaller the population, the smaller the new market is.
Rough Scan: the elaboration
This section summarizes the findings from the second phase of the Country Selection Model, the Rough
Scan. Full data from the study and a complete overview per country can be found in Annex VII “Rough
Scan: full data” on page 113. This section predominantly includes interesting facts and figures plus
supporting graphs and tables. As explained previously, the final ranking is calculated according to thescores given in the Country Selection Model.
Political Stability Index
Countries that are rated lowest (level two) are Belarus (29%), Russia (26%) and Turkey (38%). Countries
– such as dropped out countries Iran and Iraq – would be assessed on level one because these countries
are in state of war. Since we are just looking for a new emerging market, it was expected that none of the
countries would receive the highest score (level five). This is the case for among others Japan, Sweden
and the USA. The highest scoring countries are Uruguay (70%), Poland (76%), Hungary (74%) and
Malaysia (71%).
Trade relations
Earlier in this chapter is explained that a good relationship between countries entails meaningful mutual
benefits. The only country that is assessed on level one is Russia. The countries haven’t been able to
sign a peace treaty after WWII due to the Kuril Islands dispute. As of 2015 matters remain unsolved and
these disputes have effectively soured relations between the two countries. This allows us to say that
Russia is by definition not a suitable new market for expansion.
On the other hand, some countries have a very tight relationship. For instance, Japan has a very strong
relationship with Brazil and Mexico. The relationship between Japan and Brazil goes back to 1895
when the first diplomatic relations were established. More Japanese immigrants are found in Brazil thanin any other country, which is in favour of Sony. This enables a Japanese brand to be more easily
accepted. Sony has also sponsored several major events in Brazil, causing that the estimated brand
recognition will be high. The Free Trade Agreement between Japan and Mexico is in favour of this
country. Since then the trade between the two nations increased dramatically up to $20 billion USD.
Gross National Income, Purchasing Power Parity per capita in USD
Basically all the countries scored three or higher out of five. This means a minimum GNI PPP per capita
of $10.001 per citizen. This reflects to the level of welfare in a country. The two lowest scoring countries
are China with only $11.850 and Brazil with $14.750 GNI PPP per capita in USD. Highest scoring
countries are Malaysia with $22.530, Hungary with $22.800, Russia with $23.190 and Poland with
$22.790 GNI PPP per capita in USD.
Inflation rate
Practically each country left over in this part of the Country Selection Model scores a four or five out of
five. Only Belarus is ranked on level three with dramatically high inflation rate of 18,10%. Such a high
inflation rate has as a damaging economic and social effect on the economy. In contrast, some countries
stand out positively, including Mexico with 4%, Poland with 0%, Hungary with minus 0,20%, China with
2% and Malaysia with 3,10%. Only the inflation rate of Hungary should be monitored. Whether it further
decreases or remains negative for a long time, it is also not favourable for the economy. In that case
Hungary’s score would drop dramatically with minus 0,80. In that case the he country would drop three
spots to the ninth place.
-
8/19/2019 Sony Opzet Rapport
33/186
THE ULTIMATE EMERING MARKET
Size of the population
The size of the population actually represents the potential market. Therefore, the larger the potential
market, the greater the chances of success in the market. Countries with a relatively small population
and which are therewith negatively evaluated are Uruguay with 3,34 million, Belarus with 9,58 million
and Hungary with 9,89 million residents. The biggest potentials markets that have been assessed with
the highest score is – what else – China with 1 billion 367 million inhabitants and Brazil with 204,25
million citizens. These two countries are – based on the size of the population – the most interesting new
markets to entry.
Exports in million USD
Despite this is the least influential factor in the Rough Scan, export is important to estimate the extent in
which countries trade with other countries. Countries, which score lowest, are Uruguay with only an
actual amount of $10,38 million USD yearly and Belarus with $35,74 million USD yearly. The third lowest
performing country within this filter criterion is Hungary with $100 million. This is already a clear
difference with the aforementioned countries. Countries that export a high amount of products every
year have been rewarded with the highest score. These countries are China by as much as $2 billion and
$343 million and Russia with $497,8 million.
Replenishment
An important caveat here is that this is the total amount and the size of the population of that country
hasn’t taken into account. A simple calculation took place: the total amount of export divided by the size
of the population. How much USD per citizen is exported every year? This calculation is only shown in
the Excel overview of the Country Selection Model and is not used as selection criterion in the model
because all calculations were already made. Luckily this factor is not heavily counted.
It is striking that after these calculations were done, Hungary – which originally placed second lowest of
the three, now becomes first with $10.103 USD per resident. Malaysia, which was assessed moderately,
now scores on the second place with $7.370 USD per resident. On the other hand, number one scoringcountry China turns out to be not that special because the export for only $1.713 per citizen. In this
calculation, Brazil scores lowest with only $1.100 per inhabitant.
Again, this calculation is therefore not included in the final assessment in the Country Selection Model. It
will only be kept in mind when there must be made a definite choice for the new export market.
Exchange rates yearly in percentages
Seen the fact that exchange rates play a vital role in country’s level of trade – which is critical to almost
every free market economy in the world – exchange rates are among the most watched, analysed and
governmentally manipulated economic measures. Volatile exchange rates (which changes dramatically
in the previous year) can have a serious impact on operating profit. In general we can say that the more
stable the exchange rate, the better it is for profitability. The highest scoring country of all ten is China
with a discrepancy of only 5,2%. Belarus, with a whopping exchange rate volatility of 67%, scored as
only country a score of one out of five. Brazil with also high exchange rate volatility scored three out of
five, with 44,1%. Every other country scores four out of five, so moderately good with an exchange rate
between 15 and 30%.
Rough Scan: “to proceed or not to proceed”
The last section of this chapter focuses on the conclusion of the rough scan. The complete rough scan in
Excel format can be found in Annex VIII “Rough Scan Excel” on page 119.
-
8/19/2019 Sony Opzet Rapport
34/186
34
The table on the next page shows the total scores in the Rough Scan of the country selection model. As
stated in the legend, each colour stands for a separate filter criteria. The size of this area reflects the
degree of impact on the final score. The rods also show the individual scores for each criterion in each
country. This table can also be found in Annex IX “Overall rankings Rough Scan” on page 120.
The four highest-scores nations go through to the final stage: the detailed survey. This partition is also
shown in the table above. The most decisive factors for this survey have to do with the following points:
1. China
With a tremendously large population of 1 billion and 367 million people this is one of the largest
countries in the world. Despite that this country exports for over $2 billion $343 million of
products every year, this means only $1.713 per resident of China. This country has also a
relatively low GNI PPP per capita in USD, in fact its solely $11.850 per citizen. Something, which is
in favour for this country, is the very low inflation rate of 2%.
2. Mexico
A high-performing country, with no particular remarks: Mexico. Something very positive has been
the age-old strong relationship with Japan and the low inflation rate of 4%.
-
8/19/2019 Sony Opzet Rapport
35/186
THE ULTIMATE EMERING MARKET
3. Brazil
A country that seems very promising at first sight. Nevertheless the Gross National Income,
Purchasing Power Parity is only $14.750 per resident and the country exports for only $1100 per
person. Although the population size of Brazil is in favour of the country, this country suffers from
an extremely high exchange rate volatility of 44,1%.
4. Malaysia
For the second time in a row the country with only positive remarks. The political stability isassessed with 71% and the GNI PPP per Capita is very high, with $22.530. This is the highest
amount of all surveyed countries in Asia. Another fact which is in favour of the country is the low
inflation rate of only 3,1%. Despite that Malaysia scores average on the country selection model
when it comes to export, we must keep in mind that Malaysia exports for more than five times
more than China in USD every year! Malaysia exports for $10.103 per resident every year to other
countries in comparison to China, which exports for only $1.713.
When this calculation was used in the calculation, China’s score would drop with minus 0,20 up
to 3,90 and Malaysia’s score would increase with 0,20 to a final score of 4,05. Actually it means
that both countries would change places in the ranking.
Based on these scores the following top four with accompanying final score is created:
-
8/19/2019 Sony Opzet Rapport
36/186
36
-
8/19/2019 Sony Opzet Rapport
37/186
THE ULTIMATE EMERING MARKET
4DETAILED
SURVEY
-
8/19/2019 Sony Opzet Rapport
38/186
38
-
8/19/2019 Sony Opzet Rapport
39/186
THE ULTIMATE EMERING MARKET
4. DETAILED SURVEY
The final phase of the Country Selection Model is the detailed survey. This phase elaborates on the
remaining four countries: Malaysia, Brazil, China and Mexico. For an explanation of the Country
Selection Model, please read the first paragraph of chapter two on page 23. In this section the above-
mentioned countries are subjected to in-depth research. In order to reach a final recommendation, a
MABA analysis based on the Country Selection Model and a DESTEP analysis took place. In addition tothis the culture within the country is also surveyed, with help of – inter alia – the Six Dimensions Model of
Geert Hofstede. The
4.1 The Detailed Survey
Detailed Survey: the criteria
This is the fist step in order to determine the
most interesting emerging market for Sony
Corporation. In this phase, the remaining
countries – as in previous stages – are subject to
the below mentioned research criteria. For
every criterion the country will be assessed with
a score, and this score multiplied with the
weight creates the final rating. The detailed
elaboration of the criteria can be found in
Annex X “Detailed Survey: the criteria” on page
121. In this paragraph a short description and
motivation of the chosen filter criteria:
• Consumption & Demand (weight 0,15)
• Revenue Growth (weight 0,15)
• Market Penetration (weight 0,20)
• Average Revenue Per User (weight 0,05)
• Intensity of Competition (weight 0,15)
• Trade Promotions (weight 0,15)
• Environmental Performance Index
(weight 0,15)
Consumption is normally the largest GDP
component. Therefore, many persons judge theeconomic performance of the country mainly in
terms of consumption levels and dynamics.
Consumer electronics are durable and luxury
goods – it can be used for many years and it is
an essential part of people’s lives. Quite bluntly:
if there is no demand for Sony’s products, the
profit will also be forthcoming. This is therefore
an essential component to study.
A crucial aspect in this in the growth of the consumer electronics market as this shows that the market ismoving in a positive sense. Another thing to keep in mind is the market penetration within the consumer
electronics market. The lower the market penetration, in combination with a
high market growth, the better. Market growth may involve an increasing
-
8/19/2019 Sony Opzet Rapport
40/186
40
demand with the current buyers, but this might also indicate a new group of potential customers coming
around. A presently low market penetration means a high market potential. Another instrument to
measure the economy is the Average Revenue growth rate per Paying User (ARPU) per year. The higher
the ARPU, the more interesting the market is for Sony.
Secondly we take a look at the competitiveness of a country with help of The Global Competitive Index.
The more competitive a country, the more likely it is that the economy will grow faster over time. Return
on investment is one of the key factors explaining the economy’s growth potential.
Thirdly, we look again at the trade relationship between the two countries, only now specifically whether
there are agreements to facilitate mutual trade. Think for example of a Free Trade Agreement. An FTA
not only promotes bilateral trade, it also ensures that the profit margin is optimized because there are
no taxes to be paid. When entering a new market it will take a while before one can speak of a profitable
market.
Lastly a criterion, which is very important for Sony Corporation: environmental awareness. Sony
recognizes the importance of preserving the natural environment that sustains all life on the earth for
future generations and thereby ensuring that all humanity can attain a healthy an enriched life. To thisend, it is essential that the new emerging market for Sony Corporation attaches great importance to the
environment. The Environmental Performance Index (EPI) ranks how well countries perform on high-
priority environmental issues in two broad policy areas: protection of human health from environmental
harm and protection of ecosystems. This is therefore a decisive factor on what countries should achieve
the highest ranking. In other words: a minimum EPI rating of 51 and higher.
Detailed Scan: the elaboration
This section summarizes the findings from the third and final phase of the Country Selection Model, the
Detailed Survey. Full data from the study and a complete overview per country can be found in Annex XI
“Detailed Survey: full data” on page 124. This section predominantly includes interesting facts andfigures plus supporting graphs and tables. As explained previously, the final ranking is calculated
according to the scores given in the Country Selection Model. Since this is the last stage of the model
and there are only four countries left, each country will be discussed at every criterion.
Consumption & Demand
The lowest ranking country is Brazil, ranked on level two. The Brazilian economy is significantly
declining and the level of prosperity suffers on the economic downturn. Due to high supply and low
product demand, manufacturers were even more reliant than usual on seasonal sales periods/dates
such as Christmas and Black Friday. Given the depth of the economic recession in 2015, it is expected
that the demand for consumer electronics will remain weak in 2016 and following years. Even though
Brazil has the 7th largest economy in the world and it is a BRIC country, we must conclude that Brazil isn’t
an interesting emerging market for Sony.
Mexico has struggled with the fast rising exchange rate between the Mexican peso and the US dollar.
There is a large gap between low-income and high-income households in Mexico. High-income
households are the key purchasers of high-end products, continuing to acquire consumer electronics,
while low-income households are being negatively affected by rising prices of imported products. This
disparity in income also results in a clear view of the distinct group of potential customers: the high-
income households. Additionally the Mexican government is supporting low-income families to
transition to digital TV. Multinational companies have turned to Latin America, and more and more to
Mexico, in search of strong opportunities to expand their businesses.
-
8/19/2019 Sony Opzet Rapport
41/186
THE ULTIMATE EMERING MARKET
The Chinese economy grew, but slowed down in 2015 in comparison to 2014. Overall consumer
electronics continued to grown, especially in new categories of wearable electronics and OLED TVs due
to their innovation and smart functions. The sales of more traditional devices on the other hand suffered
declines. Domestic manufacturers accounted for increasing shares of consumer electronics due to
improved technology and growing brand reputation. However, traditional brands gain ground and are
more frequently purchased than the non-domestic brands such as Sony.
The best performing country is Malaysia, which is ranked on the highest level. In recent years thedemand for consumer electronics products has displayed a robust growth aided by the rising
disposable income amongst consumers. ‘Smart’ Consumer electronics become more important in
consumers’ life. There is an apparent shift of preferences towards tablets and other portable computers,
as evidenced in the number of households that own one or more laptops/tablets instead of sharing a
desktop. The core drivers in the volume growth over the forecast period will be the demand from first-
time buyers, largely from rural areas, and the population growth in the country. Meanwhile, existing
consumers are likely to purchase additional consumer electronics with their growing sophistication in
heir preferences and rising disposable income.
Revenue GrowthThe lowest performing country when in comes to the revenue growth is – again – Brazil. The growth rate
in the consumer electronics market is only 8,4%. Malaysia is ranked on level four with a growth rate of
25,3% and China is ranked on the same level with a revenue growth of 27,3%. The difference between
these two countries and the best performing country in this category is even not that big. The highest
scoring country in this case is Mexico with the revenue growth of 28,2%.
Market Penetration
With a low market growth and a relatively high (the highest of the four remaining countries) market
penetration Brazil also scores the worst. It is ranked on level three. The three tolerably good scoring
countries on the category revenue growth, also have a lower market penetration. China is also rankedon level three with a market penetration of 13,6%. Mexico has the highest market growth, but a higher
penetration than Malaysia with 11,6%. It is ranked on level four. The market penetration of consumer
electronics in Malaysia is 8,1%. This fact in combination with the market growth makes that Malaysia is
determined the most interesting country.
Average Revenue Per User
The higher the Average Revenue Per User (ARPU) is, the more interesting the country is for Sony
Corporation. Malaysia with an ARPU of $149,95 and Brazil with an ARPU of $155,79 score lowest this
time: both level two. Mexico is assessed on level four with the Average Revenue per Paying User (ARPU)
or $180,98. China scores highest – level five – with an ARPU of $197,65. This means that Chinese citizen
spend the most on consumer electronics of all four remained emerging markets.
Intensity of Competition
The intensity of competition in the four remaining emerging markets is almost identical. Mexico (4,27),
Mexico (4,34) and China (4,89) are all assessed on level four. After all, they all have a score below five
on a scale from one to seven of the Global Competitiveness Index. Malaysia received the highest
evaluation with 5,16 on a scale of seven.
Trade Promotions
A Free Trade Agreement (FTA) or an Economic Partnership Agreement (EPA) results in a higher profit
margin for Sony Corporation. Brazil is the only country with no negotiations
going on or agreements with Japan. Due to the strong relationship with Japan,
-
8/19/2019 Sony Opzet Rapport
42/186
42
this country is assessed with score two. China does a little bit better: since a couple of years there are
negotiations going on. However, Mexico and Malaysia are both doing better because both countries
have a FTA and an EPA with Japan.
Environmental Performance Index
In the first paragraph of this section, when explaining the criteria, we already stressed that the
environmental awareness of the country is essential. Sony doesn’t prefer a country that doesn’t have this
subject high on its agenda. In other words a country must have a minimum Environmental PerformanceIndex of 51 and higher. In this case, this means that China alone cannot fulfil this condition. China
therefore drops out as a potential candidate for market expansion. The other three countries, Mexico,
Brazil and Malaysia are all scoring higher than 51. Brazil scores 52,97 out of hundred, Mexico scores
55,03 out of hundred and Malaysia scores highest with 59,31 out of hundred.
Detailed Survey: “to proceed or not to proceed”
The last section of this chapter focuses on the conclusion of the detailed survey. The complete detailed
survey in Excel format can be found in Annex XII “Detailed Survey Excel” on page 130.
The table on the next page shows the total scores in the Rough Scan of the country selection model. Asstated in the legend, each colour stands for a separate filter criteria. The size of this area reflects the
degree of impact on the final score. The rods also show the individual scores for each criterion in each
country.
-
8/19/2019 Sony Opzet Rapport
43/186
THE ULTIMATE EMERING MARKET
In fact, all four counts form an interesting market for Sony Corporation. However, there are two countries
that fall of due to two different reasons. China didn’t make it due to the low score on the Environmental
Performance Index of only 43 and Brazil didn’t make it in connection with the poor economic conditions
and the low demand for the products. China ended last with a third score of 3,15 and Brazil ended last
with a score of 3,00 in the Country Selection Model.
During the comparison it is proved that Mexico and Sony are both interesting markets for Sony
Corporation. Malaysia has clearly the lead-position with the final score of 4,30 in the detailed survey.Mexico follows with a respectable score of 3,95. Based on the detailed survey we would recommend
Malaysia as the new interesting market. In the next chapters all four countries will be elaborated with a
DESTEP analysis, MABA analysis and elaboration of the 6D-Model of Geert Hofstede.
-
8/19/2019 Sony Opzet Rapport
44/186
44
-
8/19/2019 Sony Opzet Rapport
45/186
THE ULTIMATE EMERING MARKET
5MALAYSIA
-
8/19/2019 Sony Opzet Rapport
46/186
46
-
8/19/2019 Sony Opzet Rapport
47/186
THE ULTIMATE EMERING MARKET
5. MALAYSIA
This chapter provides an in-depth analysis of the country Malaysia. In this section we will look more
closely at the macro-economic factors of Malaysia through a DESTEP analysis. Also you’ll find in this
chapter more information about the Malaysian culture with amongst others the Six Dimensions Model of
Geert Hofstede. Last but not least the business attractiveness versus the market attractiveness is
examined in the MABA analysis.
5.1 DESTEP
The company is not alone in doing business. It is surrounds by and operates in a larger context. In this
case the delineation is the country Malaysia. To gain insight in the macro environment of the potential
market, the following six forces are surveyed: Demographic, Economic, Socio-Cultural, Technological,
Environmental and Political. The results of which will be summarized in this chapter. The complete
DESTEP analysis can be found in Annex XIII: “DESTEP Malaysia” on page 131.
Demographics - In July 2015 Malaysia counted more than 30,5 million citizens.
The two most represented groups within the population are 15-24 years with
16,91% (circa 5,16 million people) and 25-54 years with 41,12% (circa 12,55
million people). The number of men versus women is equally spread. The most
common ethnicities in the country are Malay and Chinese.
Economics - Malaysia, a middle-income country, has transformed itself since the
1970s form a producer of raw materials into an emerging multi-sector economy. It
is attempting to achieve high-income status by 2020 and to move farther up the
value-added production chain by attracting investments in amongst others high
technology industries and services. Current Prime Minister NAJIB is working on
the Economic Transformation Program (ETP) to boost product demand and
reduce the economy’s dependence on exports. Gross exports of goods and
services constitute more than 80% of the GDP.
Malaysia’s GDP PPP per capita in international dollars quintupled from circa $5000
in 1990 to $25.100 in 2015. At this moment the Malaysian economy’s development
is in transition from stage two “efficiency driven” to stage three “innovation driven”.
The economy performed together with two other emerging markets the highest
from the twenty largest emerging economies. The Philippines, Russia and Malaysia
recorded all a higher than 100 value of the Global Innovation Index.
Japan and Malaysia have a very strong relationship, which goes back to the 15 th
century. Malaysia has also an Free Trade Agreement and Economic Partnership
Agreement with Malaysia, which means that there are no import duties to be paid
when importing to each other countries.
There is a growing demand for consumer electronics in Malaysia. As the economy
grows, so does the demand for luxury items too.
-
8/19/2019 Sony Opzet Rapport
48/186
48
The overall infrastructure of Malaysia is one of the most developed countries in
Asia and the country is ranked 8th in Asia and 25th in the world. Also their
transportation network is one of the most comprehensive in Asia and covers a total
of 144,403 kilometres. They have a well-organized public transport system and
118 airports. The country is strategically located on the most important shipping
lanes in the world. Malaysia has two ports that are listed in the top 20 busiest ports
in the world.
More interesting facts about the Malaysian economy:
• A relatively low inflation rate of 3,10%.
• A somewhat strong exchange rate of 23,20%: this means that $1 USD is
worth $4,40 Malaysian Dollar at a particularly moment.
• The GDP official exchange rate is $326,93 billion in 2014, representing 0,53
per cent of the worlds economy.
• Gross National Income (GNI) per capita is $22.530.
• Malaysia exports for $224.900 billion every year.
• The market size for consumer electronics is $252,90 million USD. This
market is in 2015 grown with 25,3%.• The market potential in 2020 for consumer electronics is $512 million USD.
The corresponding growth rate for market potential in 2020 is 202,45%.
• The Compound Annual Growth Rate for 2014-2020 is 8,5%.
• The Average Revenue per Paying User per year in 2015 is $149,95 USD.
• The Intensity of the Competition on a scale of seven is 5,16.
• In Malaysia there are 1,86 million users of consumer electronics. The
Penetration in the Malaysian market is 8,10%.
Social & Cultural – Malaysia is a multi-cultural society. The Malay language is an
Austronesian language spoken not only by Malaysians but all Malay people whoreside in the Malay Peninsula, southern Thailand, the Philippines and more. The
main ethnic groups are the native Malays as well as large populations of Chinese
and Indians. When visiting the country it is clear that the ethnicities retain their
religions, customs and way of life. The most important festivals of each group are
public holidays, which makes Malaysia the country with the most public holidays in
the world. The country is predominantly Islamic in its religion but it’s only the
Malay Muslims who are bound by Islamic laws. The rest of the population is free to
practise their own religions.
Family is considered the centre of the social structure. As a result there is a great
emphasis on unity, loyalty and respect for the elderly. The family is the place where
individuals can be guaranteed both emotional and financial support. Malays,
Chinese and Indians all strive to maintain face and avoid shame both in public and
private. Face is a personal concept that embraces qualities such as a good name,
good character, and being held in esteem by one’s peers. The desire to maintain
face makes Malaysians strive for harmonious relationships. Face can be lost by
openly criticizing, insulting, or putting someone on the spot; doing is done in
public; showing anger at another person; refusing a request; not keeping a
promise or disagreeing with someone in publicity.
-
8/19/2019 Sony Opzet Rapport
49/186
THE ULTIMATE EMERING MARKET
Popular media reinforce the idea of consumerism as a lifestyle and carry the
advertising meant to draw consumers to products and services. Rising freedom
gives people more economic and social room to engage in consumer lifestyle. At
the same time, the new choices available in consumerist societies let people
express their social freedom as they buy products that help define and
differentiate them from their fellow citizens.
Technological – Although IT is now well and truly a global industry, eachindividual region and country reacts to international influences in its own way. One
of the most notable trends that Malaysian businesses are focusing on is the
Internet of Things (IoT), which, according to Cisco, involves connecting people and
devices at a level that previous generations would have considered impossible.
This allows for more mobile workforce, with a staff no longer restrained by their
physical workstation. High-speed Internet, a reliable cloud-computing service and
the newest technologies are essential to make this work.
Information technology – primarily the Internet – has become increasingly
important to consumerism in recent years. Think of E-commerce, collaborativefiltering, eBay and product research as a few of the innovations.
The number of people buying smartphones has increased to 7.8 million in January
2013. Broadband penetration in Malaysia increased from 55,6% in 2010 to 66% in
2012.
Ecological & Environmental - Malaysia is ranked pretty well on the Environmental
Performance Index with their score of 59,31 out of 100. Nevertheless this still
means there is a lot of room for improvement. At this time, Malaysia suffers from air
pollution from industrial and vehicular emissions, water pollution from raw sewage,deforestation and smoke/haze from Indonesian forest fires. This last point is also
for Malaysia difficult to influence.
Malaysia is a relatively safe country. The World Risk Index has assessed Malaysia
with 6,44% risk of becoming victim of a natural hazard.
Political & Legal – Malaysia is the only federation in Southeast Asia. The system of
government is closely modelled on that of the Westminster parliamentary system,
a legacy of British colonial rule. The head of the country is referred to as the King.
The Political Stability Index is assessing Malaysia with 71% political stability. The
country is multi-ethnic and multi-cultural, which plays a large role in politics. The
constitution declares Islam the state religion while allowing freedom of religion to
non-Muslims.
Since 2004 Malaysia and Japan have a Free Trade Agreement and Economic
Partnership Agreement. This means no import duties must be paid when
importing to each other countries.
The Malaysian Government is the driver in the consumption trend. It is focussing
on green growth and high level of prosperity.
-
8/19/2019 Sony Opzet Rapport
50/186
50
5.2 Six Dimensions Model
Professor Geert Hofstede conducted one of the most comprehensive studies of how values in the
workplace are influences by culture. He defines culture as “the collective programming of the mind
distinguishing the members of one group or category of people from others”. The six dimensions of
national culture are based on extensive research. The model consists of the following dimensions:
• Power Distance Index (PDI)
• Individualism versus Collectivism (IDV) • Masculinity versus Femininity (MAS)
• Uncertainty Avoidance Index (UAI)
• Long Term Orientation versus Short Term Normative Orientation (LTO)
• Indulgence versus Restraint (IND)
For a complete overview of the Six Dimensions model for Malaysia, I would like to refer to Annex XVII “6D
Model & Country specified cultural habits” starting on page 170. This last part won’t be a part of this
chapter and is only added to provide more insight into the business culture of the country.
Malaysia’s Six Dimensions
If we explore the Malaysian culture through the
lens of the 6-D Model of Geert Hofstede, we can
get a good overview of the deep drivers of
Malaysian culture relative to other world cultures.
Power Distance (100)
This dimension deals with the fact that all
individuals in societies are not equal – it
expresses the attitude of the culture towards
these inequalities amongst us. Malaysia scores
very high on this dimension (score of 100) which
means that people accept a hierarchical order in
which everybody has a place and which needs to
further justification. Hierarchy in an organisation
is seen as reflecting inherent inequalities,
centralization is popular, subordinates expect to
be told what to do and the ideal boss is a
benevolent autocrat. Challenges to the
leadership are not received well.
Individualism (26)
The fundamental issue addresses by this dimension is the degree of interdependence a society
maintains among its members. Malaysia, with a score of 26 is a collectivistic society. This is manifest in a
close long-term commitment to the “member” group, be that a family, extended family of extended
relationships. Loyalty in a collectivist culture is paramount and overrides most other societal rules and
regulations. Such a society fosters strong relationships, where everyone takes responsibility for fellow
members of their group. In collectivistic societies, offence leads to shame and loss of face.
Employer/employee relationships are perceived in moral terms (like a family link); hiring and promotion
take account of the employee’s in-group. Management is the m