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Harris, in a market that is "so fiercely competitive" Wood, quoted in Harris, The combination of the two companies, sharing a common aim, would allow SE to present a range of products that were far more technologically innovative than anything available during that time. For Ericsson, the benefits of the merge, if successful, were significant.
Furthermore, the imaging, music, audio and video entertainment advantages that Sony held would enable the production of new, innovative entertainment handsets, entering an untouched market. Sony was motivated to join Ericsson in order to expand its miniscule market share which was making it difficult to achieve growthand improve its position in the global handset market which had been relatively weak compared with its competitors.
The handset market had been going through a "rough patch" Dunn, Contrarily, Sony was failing to compete in the mobile phone market but was naturally able to sell its other products. The combination of the two then, could potentially prove to be a very successful venture. Ericsson was suffering from severe problems in with their market share dropping to a low of Product launch was disrupted and Ericsson was in dire need of help.
For the three financial quarters leading to the launch of the venture, Ericsson endured losses.
In joining forces with Ericsson, Sony sought to broaden its "platform for mobile communications which it considers of great significance for its future presence in advanced electronics consumer products and systems" Sigurdson, For example, while Sony was capable of targeting mass markets with low-tech handsets, it was not competitive in providing networking customers with high-end products which Ericsson was.
The growing popularity of 3G and mobile internet technology meant the globalization of a brand, building upon the popularity of Ericsson in Europe and Sony in Japan. Sony Chief Operating Officer predicted the mobile phone industry would move towards a multi-media broadband based network where customers would demand phones capable of handling movies, games pictures and music easily.
Although the Joint Venture was split In addition, Ericsson felt that there were synergies to be gained, which would increase sales potential beyond anything either company could achieve alone. Alternatives to a Joint Venture The joint venture between Sony and Ericsson posed several potential problems.
As suggested in Harris, the two companies differed greatly in terms of company culture; Sony being a Japanese firm and Ericsson being a Swedish firm. On top of this many criticized the joint venture saying that it would require complex collaboration of the two companies in order to work and that it was likely to cause conflicts and inefficient management.
However these options will be analysed below to illustrate why these were not ideal given their personal motivations. Recognising this however a few major issues exist in entering a license.
Moreover Ericsson may have been reluctant to give Sony access to their technology in order to prevent Sony engaging in opportunistic learning. Licensing was an option Ericsson could have taken as it has many benefits such as shortens the product development time, enhances the quality of products and processes, builds competitive advantage and expands existing business capabilities Canada Business, However despite the benefits it would not have been appropriate as this strategy does not give Ericsson direct control over manufacturing, strategy and the way their technology is marketed.
Ericsson could also lose control over the competitive advantage of their technological know-how. Furthermore new technology may become available making the licensed opportunity obsolete. Another strategy Ericsson could have undertaken was through OEM contracts.
This would provide Ericsson with easy entry into foreign markets Daniels, et. On the other hand Sony could exploit the technology transfer, learn and compete directly with Ericsson. The use of contracts needs to be established and this could be difficult in gaining the right balance that benefits both parties.
Consequently, OEM contracts are not as ideal as a joint venture. In a Franchising agreement Sony may have been able to grant independent operators to distribute its products.
By doing so this would allow Sony low risk entry into the European market and with some careful selection could provide Sony with the local know-how and links to the local wireless operators.Strategic alliance is an efficient and effective way in gaining complementary resources from a foreign party and reduces risks.
Remove barriers to enter new markets: In certain international markets, especially the developing ones, firms often have difficulties due to some domestic factors, such as government regulation and local parties. Looking into the administrative part of the company, this essay is poised to diagnose the problems of the Sony Ericsson company and the treatment that caused the parting of .
Sony Ericsson got in to alliance on 1st October and the main objective of this alliance was to be the world’s leading position in mobile phones.
SONY In Sony Corporation were founded by Masaru Ibuka and Akio Morita. Sony form alliance with LM Ericsson. If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then.
In , the mobile phone terminal market world was shaken by the announcement of the agreement between two «giants» of their respective worlds. This chosen route for Ericsson to forge an alliance with Sony was in order to gain entry into.