1 Global Organisational Environment

UNIVERSITY OF GLOUCESTERSHIRE

Global Organisational
Environment
Portfolio: Sony Ericsson
Abdul Latif Sultan : s1010402

Word Count: 3200

This report has been submitted inpartial fulfillment
Standard of the Masters
APA Referencing Style in Business Administration course
module ‘Global Organisational Environment.’ The report aims to introduce the organisation, its
purpose and present an analysis of the organisation’s external environment by using various tools of
external analysis. The report includes bringing forward the key factors affecting Sony Ericsson, its
market position and segmentation strategy employed by Sony Ericsson.
2 Global Organisational Environment

Table of Contents
Introduction…………………………………………………………...…………………………………………………………... 3

Global activities of Sony Ericsson…………………………………………………………...……………………………… 3

The Organisational Structure and Governance…………………………………………………………...…………. 4
Corporate Governance and Financial Risk Management ……………………………………………………….. 4

Stakeholder Analysis………………………………………………………………………………………………… 5

External Environment Analysis………………………………………………………………………………….. 6

PESTEL Analysis for Sony Ericsson……………………………………………………………………………………. 6

Porter’s five forces analysis…………………………………………………………………………………………….. 9

Market Share and Segmentation……………………………………………………………………………………… 10

Opportunities and Threats………………………………………………………………………………………………… 11

Introduction to Sony Ericsson around the world and in most of the major
markets [1][2].

Sony Ericsson is a jointly owned venture of
Japanese consumer electronics giant, Sony
Corporation and Swedish Telecom player
Telefonaktiebolaget LM Ericsson. Both of them
hold equal stake in Sony Ericsson (50:50). After
its incorporation in October, 2001 with its global
head quarter in Hammersmith (London), the
corporation’s presence can be felt almost all
Sony Ericsson has been working at high costs
towards its vision, which in their official
documents is stated as “to be the
Communication Entertainment brand, enabling
people to create and participate in new
experiences which blur the line between
communication and entertainment” [2].
Omatseye in an article calls this joint venture- a
3 Global Organisational Environment

marriage rather than just a joint venture and
argues, that this as a significant step in the
telecom world [1]
Another news article reports how Sony and
Ericsson have replaced older successful research
laboratories by researching on new technology
such as the Bluetooth technology, standard and
how this is an evolution in R&D [3]. Sony’s
wide portfolio includes entertainment that
encompasses of music, movies, games etc. while
Ericsson is known for being highly competent in
telecommunication technologies. Ericsson
maintains a good relationship with a number of
telecom service providers [2][3]. Drawing on the
strengths of its parents Sony Ericsson is
involved in manufacturing mobile phones,
accessories and providing content and
application services in key areas of imaging,
music, design and other multimedia features to
its users. Both companies ceased production of
The production facility at Beijing , Beijing SE
Potevio Mobile Communications Co., Ltd. is
Sony Ericsson’s primary and only in-house
manufacturing facility [2].
References:
1. Omatseye, S. (2001). Sony Ericsson phone marriage
starts Oct. 1. RCR Wireless News, 20(18), 1. Retrieved
from Business Source Complete database.
2. (2001). Sony Ericsson Mobile Communications
established today. Cisionwire retrieved.
3. (2003). Sony Ericsson Mobile Communications AB
SWOT Analysis. Sony Ericsson Mobile
Communications AB SWOT Analysis, 1-8. Retrieved
from Business Source Complete database.

individual handsets.

The Organisational Structure and

Governance:
Global Activities of Sony Ericsson:

Sales and marketing activities of Sony Ericsson

are concentrated all across the globe and divided
in these following market areas:

 Western areas
 Central & Eastern Europe, Middle East and
North Africa
 Asia Pacific
 China
 Japan
 Americas

Their Research and development sites are

located in:

 Lund, Sweden
 Beijing, china
 Tokyo, Japan Figure 1.1
 California, US
4 Global Organisational Environment

Fig. 1.1 [4] shows the organisational structure at

Sony Ericsson. The structure is based on its
functional divisions, where different functions of
the organization have been departmentalized.
Each department follows its own chain of
command within.
The President, Bert Nodberg at the top level
plays multiple roles as the Chief executive
officer and the chairman of Sony Ericsson. The
post of executive vice president is shared by two
competent persons, Rikko Sagakuchi and
Kristian Tear. The portfolio for the chief
financial officer is held by William A. Glaser Jr.
Corporate Governance and
Financial Risk Management:
The Board of directors are responsible for the
organization and operations of the firm. The
President keeps the board and the parent
companies updated regularly on new
developments, position of the organization,
liquidity etc.
Sony follows a policy for managing its financial
risks. “Sony Ericsson’s financial risk
management is governed by a policy approved
by the Sony Ericsson Board. The management of
risks is executed by a centralised treasury
function and its principal role is to ensure
appropriate financing, manage the liquidity,
secure effective cash-management and conduct
effective management of accounts receivables.
The centralised treasury also manages and
controls financial risk exposures in a manner
consistent with underlying business risk and
financial policy” [4].
References:
4. Sony Ericsson. (2009). Sustainability Report. United
Kingdom: Sony Ericsson.
http://www.sonyericsson.com/cws/download/1/823/52
8/1280492941/SE_Sustainability_Report_2009.pdf

Stakeholder
5. Sony Ericsson.Analysis
(2010). Executive Biographies.
Retrieved November 22, 2010, from sonyericsson.com

Stakeholders are those who have rights or

interests in a system [6].
Sony Ericsson is known for its sound corporate
social responsibility (CSR) practices. In one of
its CSR documents, Sony Corporation identifies
the potential stakeholders of Sony Ericsson.
With more Research one can identify them as
follows [7]:

1. Shareholders and parent companies

2. Board of Directors
3. Customers
4. Suppliers
5. Employees
6. Other organizations
7. Business Partners
8. Local Communities
5 Global Organisational Environment
9. Government
Stakeholder analysis is used to analyse the level
of interest each group of stakeholder would
generally show and the power they yield that
affect the organisation in one or more ways. One
of the few ways of stakeholder analysis is using
the power/interest matrix.
  Level of Interest
 
Low
Power
High
The Mendelow’s Power/Interest matrix indicates
the type of relationship which organizations
typically might establish with stakeholder
groups in the different quadrants [8]. Based on
his matrix we can map stakeholders on different
quadrants.
References:
6. Mayers, J. (2005). Stakeholders power analysis.
Power-tools , 3-5.
7. Sony Corporation. (2005). Corporate Social
Responsibility Report. Japan: Global reporting.
Mendelow, A. (1991). Proceedings of the second
internaitonal conference on Information Systems.
Cambridge: MA
8.
Low High
Local Communities Customers, Suppliers, Employees,
Other Organisations, Business
Partners
Government Shareholders, Parent co., Board
of Directors
Figure 2.1
Fig 2.1 [9] maps the various stakeholders of
Sony Ericsson according to Mendelow’s
Power/Interest Matrix. Local Communities
would be considered as an entity with low power
and low interest towards the Organisation
because of the minimal effort they make.
The government would be an entity which yields
high power because of its ability to introduce or
change laws for instance but they have a
relatively low interest towards how the company
fares & they have to be kept satisfied at always.
SonyEricsson’s customers, product suppliers,
employees, competitors, partners are entities that
would look forward to be informed about the
business and have relatively low power but have
a high interest in the organisation and its
policies. The Board of Directors, Shareholders
& the Parent companies (Sony & Ericsson)
would be considered as the key players of the
organisation as they yield high power to change
6 Global Organisational Environment
strategies and their level of interest in Sony
Ericsson is high.
External Environment Analysis
Business environment is a set of political,
economic, social, technological, environmental,
legal, competitive forces that are largely outside
the control and influence of a business and that
can potentially have both a positive and a
negative impact on the business [10].
Sony Ericsson would be affected by its
competitors because their actions affect the
ability of the business to make profits, because
competitors will continually seek to gain an
advantage over each other, by differentiating
their product and service, and by seeking to
provide better value for money [11].
The External Environment of Sony Ericsson can
be much better analysed using 2 popular and
highly useful analyzing tools; PESTEL
ANALYSIS and PORTERS FIVE FORCES
MODEL.
PESTEL Analysis for Sony Ericsson:
There are many factors in the external
environment that would affect the decisions
made by the management at Sony Ericsson.
Changes in law, policies, government
regulations, standards, tax etc. are examples of
factors that would affect the organisation
externally. To analyse these factors they can be
categorised using the PESTEL model.
References:
Mendelow, A. (1991). Proceedings of the second
internaitonal conference on Information Systems.
Cambridge: MA
9.
10. Wood, R. (2000). Managing Complexity. The
Political Factors:books.
Economist
11. (2009).
These factors
Theinclude
External all the policies
Environment. or other
Retrieved 1 2010,
direct, indirect interventions by the government,
from The Times 100 Website:
http://www.thetimes100.co.uk/theory/theory--the-
government priorities etc. Government decisions
external-environment--236.php
can affect Sony Ericsson up to a high extent.
Sony Ericsson is present in a number of different
countries worldwide and the political scenario in
each one of them would affect them in one way
or the other. Political stability of existing or
potential markets affects the decisions made by
the management at Sony Ericsson.
Economics Factors:
These factors include more of macro-economic
changes such changes in tax rates, rate of
borrowings, exchange rates. It has to do with the
economic scenario of the country(ies) it carries
out operations in. Economic status prevailing in
different countries and especially the United
7 Global Organisational Environment
Kingdom would affect Sony Ericsson
significantly. The Rate of borrowing in the UK
where the co. is originally based in is very low is
significantly high in 2010 which would affect
their plans for expansion. Inflation has been
provoking higher wage demands from
employees. The Economic conditions in the UK
and other western countries are not very good
with huge economic trade deficits. Due to the
credit crunchy and the ongoing recession most
countries have been facing, there have been
significant changes in exchange rates in 2010
which affects imports and exports made by Sony
Ericsson worldwide. Sony Ericsson has had to
formulate new strategies in 2010 with respect to
segmentation and to work out the new prices of
products being launched in different markets
because of the changes in these exchange rates.
Low growth in the National income of most of
the countries has been resulted in low demand of
the firm’s products. Because of these increasing
costs and problems Sony Ericsson has had to
reduce the size of its organisation in terms of its
In 2010, the uncertain global economic climate
has had a negative effect on Sony Ericsson and
as a direct result of this it was necessary to
remould and reduce the size of the organisation
around the world. Without these reductions it
would have been impossible for Sony Ericsson
to remain competitive and to continue to operate
effectively [12].
Social Factors:
Changes in taste, trends of people affect the
organisation too. It also has an impact on the
demand of the firm’s products.
According to Gillespie “this also has an impact
on the availability and willingness of individuals
to work. In the UK, for example, the population
has been ageing. This has increased the costs for
firms who are committed to pension payments
for their employees because their staff are living
longer. It also means some firms such as Asda
have started to recruit older employees to tap
into this growing labour pool. The ageing
population also has impact on demand: for
example, demand for sheltered accommodation
and medicines have increased whereas demand
for toys is falling. [13]”. Other components of
these factors include using Ethical business
practices and employee welfare. Sony Ericsson
has been having drives to work towards the
benefits of the society and employee welfare.
Sony Ericsson protects the human rights of all
its employees and complies with all the local
and international regulation policies with respect
to Human resources. Due to the changing social
scenarios and realizing that businesses play an
important part in the global community, Sony
Ericsson has also been involved in other causes
and fund raising programs [12].
References:
12. Sony Ericsson. (2009). Sustainability Report. United
Kingdom: Sony Ericsson.
http://www.sonyericsson.com/cws/download/1/823/52
8/1280492941/SE_Sustainability_Report_2009.pdf
13. Gilespie, (2007) Foundations of Economics, Oxford
Technological Factors:
University Press Website:
http://www.oup.com/uk/orc/bin/9780199296378/01stu
Withdent/additional/page_12.htm
new technology Sony can create or
innovate products for e.g. The Walkman series,
Cybershot high definition cameras embedded in
cellphones etc., this was all possible due to the
technological advances. Technology helps Sony
Ericsson reduce costs, improve quality, and lead
to innovation and new developments. These
products benefit the company as well as its
customers. Sony Ericsson works around
technology. In order to stay ahead of its
competitors they have to stay updated at all
times and regularly research and develop.
Environmental Factors:
Environmental factors involve contributing
towards avoiding weather and climate change
and being sustainable towards the environment.
8 Global Organisational Environment

With major climate changes occurring due to trade restrictions enforced on many countries for
global warming and with greater environmental e.g. import of Chinese products in some
awareness this external factor is becoming a countries e.g. Syria
significant issue for Sony Ericsson and other
firms to consider. The general move towards
more environmentally friendly products and
processes is affecting demand patterns and
creating business opportunities [14]. Due to the
recent environmental issues and new guidelines
towards sustainability, Sony Ericsson has had to
take initiatives towards being sustainable. For
E.g. it has reduced its carbon footprints
significantly by 2009 and aim to reduce it by 20 References:
percent by 2015, they strive to reduce emissions
14. Gilespie, (2007) Foundations of Economics, Oxford
in their product lifecycle, use more of renewable
University Press Website:
resources of energy, committing to recycling, http://www.oup.com/uk/orc/bin/9780199296378/01stu
reducing mobile charging and power dent/additional/page_12.htm
consumptions. All this was done because of the
changing environmental guidelines and more 15. Sony Ericsson. (2009). Sustainability Report. United
Kingdom: Sony Ericsson.
awareness because of environmental problems
http://www.sonyericsson.com/cws/download/1/823/52
[15]. 8/1280492941/SE_Sustainability_Report_2009.pdf

Legal Factors:
It refers to the legal and regulatory environment
Sony Ericsson operates in locally or
internationally. In 2009 and 2010 there have
been there have been many significant legal
changes that have affected Sony Ericsson. The
introduction of age discrimination and disability
discrimination legislation, an increase in the
minimum wage and greater requirements for
firms to recycle are examples of relatively recent
laws that affect an organisation's actions [14].
Legal changes can affect a firm's costs (e.g. if
new systems and procedures have to be
developed) and demand (e.g. if the law affects
the likelihood of customers buying the good or
using the service). Other factors that have
affected Sony Ericsson recently are changes in
International policies and environmental acts,
Porter’s five forces analysis:
The Five Forces model of Porter is an outside-in
business unit strategy tool that is used to make
an analysis of the attractiveness (value...) of an
industry structure. The Competitive Forces
analysis is made by the identification of 5
fundamental competitive forces [16].
1. Entry of Competitors: It is not very difficult
for new entrants to enter the
telecommunication and multimedia market.
Although a few telecom regulations, high
investment might be a barrier for new
players, but it is not very difficult for new
entrants to setup. For e.g. the launch of 3
new mobile phone companies in India
offering cheap mobile phones has had a
negative impact on Sony Ericsson and
9 Global Organisational Environment

similarly in other countries.

2. Threat of substitutes: The degree of threat is

relatively high and depends on the product
and its features. Sony Ericsson has had to
introduce cheap multimedia phones to avoid
customers from shifting to other multiple
cheap substitutes like Mp3 players, cheap
tablet android computers.

3. Power of buyers: The power of buyers in

some markets is very high and some its very
low. Sony is affected by the power of buyers
around the globe. For e.g. the power of
buyers in Asia is relatively higher than the
west.

4. Bargaining power of suppliers: Suppliers

aren’t very strong in case of Sony Ericsson.
There are a large no. of suppliers that can
meet the requirements of the firm. Suppliers
do not have a very high power.
5. Rivalry among existing players: There is
very strong competition in this industry.
There are a number of big and small players
that affect SE. Nokia is the strongest
competitor and the company that is
dominant. Other competitors that SE faces
threat from are Blackberry, LG, and
Samsung.
References:
16. Porter, M.E. (1979) How Competitive Forces Shape
Strategy, Harvard business Review, March/April 1979
Market share and segmentation
The market share of Sony Ericsson by the end of
2010 was better than before. It was around 3.5%
and the value market share has been somewhere
around 6%. Its sales accounted for around
11,008 units in 2010 out of 325,556 that were
sold totally. Nokia being the biggest player
managed to sell 111,473 units [17].
Sony Ericsson has employed a no. of market
segmentation policies in the past. But its
segmentation in 2010 has been introducing
more of business and high end phones with
high features for e.g. the Xperia series.
Innovation in its Walkman series is also one of
its segmentation. Introducing phones with
10 Global Organisational Environment

multimedia features and more options like

music, games, mobile social networking SE aims
to capture a share of the teenage market. With
the introduction of its Satio series it aims at the
the other age groups and class of people. Both
demand and technology for handsets with
wireless internet, better storage, cameras and
music capabilities are increasing. This has
influenced Sony Ericsson to mould its strategies
to fit into the current scenario. According to
Robin Hohman from Technews world “Devices
like Sony's PSP and other multimedia gaming
terminals and portable media players like the
iPod have shown that if kids want something
they can definitely find the resources to buy it,"
he said. "It's all about making the devices
appealing enough so that they can compete
with the likes of the iPod and people will spend References:
the extra money on that rather than on an iPod.
17. Sony Ericsson. (2010, October 15). Q3 Financial
[18]” Press Release. Retrieved November 20, 2010, from
Sony Ericsson Website:
http://www.sonyericsson.com/cws/corporate/press/pr
essreleases/pressreleasedetails/q32010semcfinancialsp
ressrelease-20101015?cc=global&lc=en

18. Robin, H. (2006, September 20). Sony Ericsson to

Launch M-Buzz
Opportunities andMusic Service. facing
threats Tech News World .

SE in 2010
Opportunities Threat

• Expanding content • Intense

service business competition

• New product launches • Environmental

Regulations
• Growth of
Smartphones

According to Data Monitor Reports and research

the opportunities and threats in 2010 for SE can
be stated as follows.
11 Global Organisational Environment
Opportunities:
Expanding Content Service Business: The
company has been expanding its content
services portfolio in recent times. PlayNow is
Sony Ericsson's content delivery platform. In
recent times, it has expanded PlayNow to offer
movies and an application store, in addition to
music and game downloads. Additionally, Sony
Ericsson announced, in 2009, its
'Communication Entertainment' strategy, which
aims to broaden and unite entertainment
experiences into a single offering. In November
2009, the company launched the Xperia X10, the
first phone in a family of phones with a new user
experience (UX) platform. The UX platform,
built on the Open OS, creates user experience by
combining entertainment features with signature
applications, integration of social media services
and graphical user interface. In addition, the
company launched Sony Ericsson Vivaz, the
second installment in a new family of
communication entertainment phones and also
with HD video capabilities in January 2010. The
company also has content licensing deal with
Sony Music Entertainment. This strategy allows
Sony Ericsson to ensure its devices include the
most desirable applications and features for
consumers, as the mobile content services
market is forecast to cross $130 billion by 2015.
The company's expanding content services
business will allow it to record steady revenue
from these services in coming years.
New Product Launches: Sony Ericsson has been
launching new products in recent times. In June
2009, the company introduced its first mobiles
as part of GreenHeart portfolio strategy, C901
GreenHeart and Naite. It also launched the
world’s first motion activated headphones,
MH907, which enables users to listen to the
music by plugging in two earphones and pause
by removing one earphone, in September 2009.
In December 2009, the company added the Sony
Ericsson Elm phone, the Sony Ericsson Hazel
phone and the Bluetooth Noise Shield Handsfree
VH700 to its GreenHeart portfolio. In addition,
the company introduced VH110 and VH410,
new Bluetooth headsets in June 2010. The
company's increasing new product portfolio will
help it to gain market share and revenues in
coming years.
Growth of smart Phones: The global smartphone
market is expected to grow in the coming years.
According to the industry sources, the
smartphones are forecast to grow at an annual
rate of 32% between 2010 and 2014. More than
50% of this growth in handsets is forecast to
come from the developing markets of Asia-
Pacific, including China and India, and Central
and Latin American states. Also, the smart
phones are expected to represent 26% of all
handsets in 2014, compared to 14% in 2009. The
company also offers smartphones to its
customers as part of its portfolio. In addition, in
June 2010, Sony Ericsson launched Xperia X10,
X10 mini and X10 mini pro smartphones.
Growth of smart phones presents an opportunity
for the company to enhance its revenues in the
coming years. [19]
References:
Threats:
19. DATAMONITOR: Sony Ericsson Mobile
Intense Competition:
Communications The
AB. companyEricsson
(2010). Sony faces severe
Mobile
Communications AB SWOT Analysis, 1-9. Retrieved
competition in the mobile phones market. In the
from EBSCOhost.
low end mobile devices segment, the company
has been facing competition from South Korean
mobile device companies such as LG and
Samsung, while it continues to compete with
Nokia and Motorola, among others. In the high
end mobile devices/smartphones segment, the
company is facing intense competition from
Apple, RIM, HTC, Nokia, HP and Samsung.
Additionally, it is also facing competition from
mobile network operators offering mobile
phones under their own brand. The company's
market share and revenues have been
significantly affected by intense competition in
recent times. Intense competition will continue
12 Global Organisational Environment

to affect the company's operating performance

and market share in coming years.

Environmental Regulations: Sony Ericsson is

subject to a broad range of environmental,
including laws and regulations relating to air
pollution, water pollution, the management,
elimination or reduction of the use of hazardous
substances, decreases in the level of standby
power of certain products, waste management,
and recycling of products, batteries and
packaging materials. For instance, the company
is required to comply with a number of
environmental regulations enacted by the
European Union such as the Restriction of
Hazardous Substances (RoHS) Directive,
restricts some heavy metals and two types of
brominated flame retardants (BFR). Some public
interest organizations are advocating for
strengthening of the RoHS directive by
imposing restrictions on all BFR as well as
polyvinyl chloride (PVC) in electronics put on
the market. Similar regulations are being
formulated in other parts of the world, including
China and South American countries. The
company may incur substantial costs in
complying with the above-mentioned
regulations and other similar programs that BIBLIOGRAGHY
might be enacted in the future. Non compliance
with these regulations may result in penalties or
1. Omatseye, S. (2001). Sony Ericsson phone
suspension of the company’s operations thereby marriage starts Oct. 1. RCR Wireless News, 20(18),
adversely affecting its brand image. 1. Retrieved from Business Source Complete
database.
13 Global Organisational Environment

2. (2001). Sony Ericsson Mobile Communications established today. Cisionwire retrieved.

3. (2003). Sony Ericsson Mobile Communications AB

SWOT Analysis. Sony Ericsson Mobile
Communications AB SWOT Analysis, 1-8. Retrieved
from Business Source Complete database.

4. Sony Ericsson. (2009). Sustainability Report. United

Kingdom: Sony Ericsson.
http://www.sonyericsson.com/cws/download/1/823/
528/1280492941/SE_Sustainability_Report_2009.p
df

5. Sony Ericsson. (2010). Executive Biographies.

Retrieved November 22, 2010, from
sonyericsson.com

6. Mayers, J. (2005). Stakeholders power analysis.

Power-tools , 3-5.

7. Sony Corporation. (2005). Corporate Social Responsibility Report. Japan: Global reporting.

Mendelow, A. (1991). Proceedings of the second internaitonal conference on Information Systems. Cambridge: MA

8.

Mendelow, A. (1991). Proceedings of the second internaitonal conference on Information Systems. Cambridge: MA

13. Porter, M.E. (1979) How Competitive Forces Shape

Strategy, Harvard business Review, March/April
9. 1979

10. Wood, R. (2000). Managing Complexity. The
Economist books.
11. (2009). The External Environment. Retrieved 1
2010, from The Times 100 Website:
http://www.thetimes100.co.uk/theory/theory--the-
external-environment--236.php
14. Sony Ericsson. (2010, October 15). Q3 Financial
Press Release. Retrieved November 20, 2010, from
Sony Ericsson Website:
http://www.sonyericsson.com/cws/corporate/press/
pressreleases/pressreleasedetails/q32010semcfinanc
ialspressrelease-20101015?cc=global&lc=en

15. Robin, H. (2006, September 20). Sony Ericsson to

Launch M-Buzz Music Service. Tech News World .

12. Gilespie, (2007) Foundations of Economics, Oxford 16. DATAMONITOR: Sony Ericsson Mobile
University Press Website: Communications AB. (2010). Sony Ericsson Mobile
http://www.oup.com/uk/orc/bin/9780199296378/01s Communications AB SWOT Analysis, 1-9. Retrieved
tudent/additional/page_12.htm from EBSCOhost.
14 Global Organisational Environment