For a long time, Sony’s profitability has been plagued by market and investors. Sony announced its company’s development plan for the financial period from 2015 to 2017 in February this year. It proposed to use ROE as a key performance indicator of the company and formulate an overall Equity yield exceeds 10% and overall operating profit exceeds 500 billion yen.
Then, what changes will Sony make in its core business and marketing strategy, and what impact will it have on Sony's business in China?
“Over the past three years, Sony has completed structural adjustment and business reforms. In the next stage, we will strive to develop Sony into a high-profit-making enterprise.†Sumitani Katsuhiko, Chairman and CEO of Sony China, said in an exclusive interview with Tencent Technology that the structural reforms and transformation goals After establishing an efficient operating system and Sony's internal reforms, further development is not necessarily simply to pursue performance figures. The shift from structural adjustment to further growth was in 2015.
Three types of business division: increase profit-oriented
From the perspective of Sony's next development strategy, business operations will focus on profitability instead of pursuing business volume; giving more autonomy to various businesses in business operations; and positioning various businesses from a business portfolio perspective.
According to the company's overall business portfolio, Sony will subdivide all types of business into three categories: “growth engine categoryâ€, “stabilize profit contributorâ€, and “market fluctuation management areaâ€. Each business will set a target of investment return rate respectively, and improve profitability as the key operation target.
Among them, the growth engine category includes components business, games and network services business, film and music and music business. As the company that drives the company's profit growth in the next three years, Sony will vigorously develop such business and conduct strong capital investment in order to achieve sales growth at the same time. The goal of profit improvement;
The stable profit contributors include video product and solution business, video and audio business are types of business that can contribute stable profits. Sony will give priority to maintaining the stability of its profit contribution and good cash flow, and will not carry out large-scale investment and production. .
The market fluctuation management field includes television and mobile communication services. Based on the fiercely competitive market environment, Sony will prioritize risk reduction and ensure profits, carefully select product development categories and market areas, and control the scale of capital investment to establish a business structure that can ensure stable profits. .
It is worth noting that although Sony has proposed to develop smart phones as one of the main measures to revive the sustained loss of consumer electronics business, the reality is not satisfactory. The loss of mobile communications business has been the main drag on Sony's profit margins. The reason is that if Sony lowers its investment proportion in the future, the market share of smartphones and other products may decline further while increasing profits.
“In the past three years, the profitability of the Sony Group has not been optimistic. We have adopted measures such as adjustment of categories and frameworks.†Kuriyama said that before Sony’s withdrawal from the computer business and the restructuring of its headquarters, the company’s cost was reduced by 30%. The cost of sales companies worldwide has been cut by 20%, and the market has responded positively. Sony's stock price has now almost doubled compared with the same period of the previous year.
“We did not consider exiting the television business. TV products are an important part of the living room strategy. We must use the advantages of technology accumulation and research and development to continuously enhance our traditional advantages in terms of quality, sound quality, and design.†However, Kurita Natsuki also stressed that Sony will not give up TV business.
In the TV business, Sony has split into an independent "Sony Vision Products Corporation." Kurida Hideki revealed that the home entertainment and audio products division where the TV business is located is expected to achieve its fiscal 2014 profit.
For the third quarter of fiscal year ended December 31, 2014, Sony’s sales revenue increased by 6.5% year-on-year to 2,566.7 billion yen ($212.13 billion); operating profit increased compared to the same period last year With a total of 93.2 billion yen, the profit for the quarter was 182.1 billion yen (US$1.505 billion).
Sony China 2015 Strategy
"The strategy of Sony China in 2015, our new slogan is the pulse of the new Sony, from the transformation stage to the stage of further development." Talking about the direction of Sony's development in the Chinese market in 2015, Kuritsutashi said that in addition to the United States and Japan, The fast-growing Chinese market has become one of Sony's three major global markets, such as the component business in the growth engine core business. Sony has three companies in seven plants in China.
“Sony is a listed company. Profit margin is an indicator that we must assess and is also required by shareholders. In China, the most ideal situation is that manufacturers, distributors, and users get a lot of wins. All this is based on technological differentiation. Differences in value and differentiation in customer perception are the only reasons that this ecosystem will be healthy.†Kuriyama Sakura said to Tencent Technology.
From the development strategy, Sony has four strategies, including: continue to strengthen high-value-added high-end products (4K TV, high-resolution audio products, micro-single, etc.); gather young people and middle class (and above) class; Develop and develop new businesses, such as ultra-short-focus projectors in the LifeSpaceUX series, medical fields, education, etc.; Continue OneSony strategy to leverage the full range of advantages in electronics, film, music and games in China (Sony Computer Entertainment’s console business March 20 has officially launched in China.)
“China is a diversified market and it is a mixture of different countries. The economic level of each region and the differences in the tastes and habits of users are different. Sony needs different strategies and needs better marketing skills.†According to the disclosure, Sony has a high degree of autonomy in China. It does not need to report to the headquarters within its investment decision. Instead, it quickly makes judgments based on changes in the market. At the same time, each subsidiary company operates independently and has certain decisions on products and investment. right.