Japanese Investment in World Economy †MyAssignmenthelp.com

Question: Discuss about the Japanese Investment in World Economy. Answer: Introduction The present report is developed for providing an analysis of the organizational changes in the Sony Corporation responsible for its preset growth and success. This has been carried out through analyzing the case study of Sony Corporation that has highlighted the strategies adopted by the Sony for overcoming its declining profitability. The case study has provided an analysis of the performance of the company since the few past years in order to provide an evaluation of its decisions. The report has provided an evaluation of the decisions that the company has taken for improving its growth and profitability. Sony Corporation, a leading Japanese multinational electronics company, has diversified business including electronics, entertainment and financial services since its establishment. The company since its establishment has undergone various structural changes for improving its financial performance. The company attained an international recognition for its electronic products soon after its establishment in the year 1971 (Farrell, 2008). However, its financial performance suffered a setback in the consecutive years due to the impact of foreign exchange rates and increasing competition in the global marketplace. The companys financial performance has been declining over the past few years. The company has recorded an operating loss from the period 2010-2012 due to degrading performance of its business segments such as consumer products and services and professional devices and solutions. The increasing competition from the global competitors such as Samsung, Canon and LG further impact ed negatively its sales in the international market. The company recorded an operating loss of about 456.7 billion in the year 2012 with a significant increase in the capital expenditure to about 295.1 billion (Sony Corporation, 2012). The main reason for the declining sales of the company was attributed to its existing organizational structure. The company was operating is several business segments and thus lost focus on its major segments. The company operates in various divisions that are entertainment, insurance and chip manufacturing. The major operations of the company are focused on the electronic products such as audio and video equipments, radio, television and many others. As such, the company is presently focusing on transforming its organizational structure for overcoming its present business challenges. The CEO of the company has introduced a new management structure One Sony in the year 2012 for reinforcing and integrating its overall business structure. This is done mainly to succeed in the global competitive marketplace by focusing on the companys core competencies and strengths. The company is estimated to record an increase in the revenue by 5.2% on an annual basis with the transformation of its o rganizational structure (Sony Corporation, 2012). The company was believed to have a downfall in its financial performance due to its diversified organizational structure with several business segments having their own mission and vision statement. Also, the negative impact of foreign exchange rates after the downturn experienced by the economy of Japan due to Earthquake and floods in the year 2011 has also impacted its performance to a large extent. The company with its existing organizational structure is not able to focus on a major business segment. The increasing competition in the external marketplace also had resulted in reducing the sales and income generation of the company. The CEO of Sony Corporation in order to overcome from the existing challenges has implemented new structural changes in its business segments for improving its competitive position and overcoming from the operating losses. The new organizational structure introduced by the management One Sony focuses on reinforcing its diverse business segments so that it can devise strategies for improving the performance of its major business units (SonyCorporation, 2012). The strategic shift of the company is intended to integrate its operational activities so that it can focus on its core capabilities and competencies. The reorganization of the company structure is believed to achieve the satisfaction of the customers through emphasising on electronic products market and thus securing its competitive image (George, Frynas and Mellahi, 2015). The company has also announced a strategic plan in the year 2012 for overcoming its present business challenges as follows: To strengthen its core business in the area of electronics products To undertake expansion in the emerging markets To create new business through introducing innovative products As per this strategic plan, the company has strategically transformed its business segments into mainly digital imaging, game and mobile. There will be a single management team working together with the heads of each business unit and developing the overall financial, corporate and business strategies. These strategic initiatives of the company were aimed to strengthen its brand image in the international market through driving its growth and profitability. As analyzed from the consolidated financial statements of the Sony Corporation given in the case study, the strategic initiatives have not helped in improving its financial performance. The company had succeeded in reducing its operational cost and expenditure from the year 2010-2012 as depicted in its consolidated statement of income. The cost and expenses has reduced from 7,151,991 million to 6,438,790 from the year 2010-2012. However, there is no significant increase in the sales and operating revenue in the year 2012 with the adoption of the strategic changes as depicted from its income statement. The sales and operating revenue has decreased from 7,213,998 million to 6,493,212 from the period 2010-2012. This is mainly due to the increase in the income taxes levied on the company in the year 2016 and also due to reduction its operating income realized from other business activities (Sony Corporation, 2012). The strategic change in the financial performance of the company over the year 2010-2012 can be evaluated through the use of ratio analysis. The ratio analysis will help in analyzing the profitability and liquidity realized by the company after the adoption of the strategic changes in the year 2012 as follows: Profitability Analysis: The profitability analysis of the company can be done through the evaluation of the net profit ratio. The net profit ratio examines the profitability realized by the company after meeting all its operating expenses such as taxes. The formula for calculating the net profit ratio can be stated as follows: Net Profit Ratio=Profit after tax/Sales Net Profit Ratio= -456,660.00/ 6,493,212.00 Net Profit Ratio= -7.03% Liquidity Analysis: The liquidity analysis of the company predicts its ability to meet its financial obligations through maintaining appropriate cash balance. It can be analyzed through the calculation of the current ratio. The current ratio measures the ability of a company to meet its short and long term obligations by providing an assessment of its current assets with that of its current liabilities. The current ratio of the company for the year 2012 can be calculated as: Current Ratio=Current Assets/Current Liabilities Current Ratio=3,754,962/4,529,981 Current Ratio=0.82 The ratio for the year 2011 can be calculated as follows: Current Ratio=3,844,046/4,135,299 Current Ratio=0.92 Therefore, it can be said from the ratio analysis of the company that its profitability and liquidity position has not improved even after the implementation of the strategic initiatives of organization restructure. On the contrary, the financial performance has further declined and therefore it can be said that the strategic actions taken by the management of the company has not proved to be successful (Sony Corporation, 2012). The competitor analysis of the company undertaken can also be depicted as follows: Profitability ratios of year 2012 Particulars Sony Apple Microsoft Revenue 6,493,212.00 $ 156,508.00 $ 73,723.00 Net Profit -456,660.00 $ 41,733.00 $ 16,978.00 Net Profit Ratio -7.03% 26.67% 23.03% It has been illustrated from the competitor analysis that the profitability of Sony Corporation has still not increased even after its restructuring in comparison to its competitors such as Apple and Microsoft. The company has still reported an operating loss while its competitors are achieving increasing profits in the electronic markets on a global level. The main reason for the failure of the strategic actions of the company can be its late implementation of the latest technologies for the manufacturing of the electronics products. The competitors have strengthened their brand image in the marketplace by providing innovative features in their electronics products. The Sony Corporation still lacks on technological platform from its competitors due to its poor performance in the past years as a result of economic downturn. The electronics market has reached an oversaturated position and therefore the company need to implement some long-term growth strategies in addition to restructu ring so that it can attain success in the future context (Sony Corporation, 2012). Conclusion Thus, it can be said from the overall analysis of the case study that strategic changes adopted by the Sony Corporation in the year 2012 has not proved to be successful in improving its financial growth. Therefore, it should develop some innovative growth strategies to survive in the highly competitive global electronics marketplace. References Farrell, R. 2008. Japanese Investment in the World Economy: A Study of Strategic Themes in the Internationalisation of Japanese Industry. Edward Elgar Publishing. George, J., Frynas and Mellahi, F. 2015. Global Strategic Management. Oxford University Press. Sony Corporation. 2012. Reinventing Itself to Rediscover the Technological Edge.