Sony 2004

1
Gabriela Gaut Philippe de Montenon Marguerite
Lassalle Stanley Chan Yoshitomo Shinji
Sony France Best in France Case Study September
- December 2004
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SONYS CORPORATE INFORMATION

• Foundation May 7, 1946
• Headquarters Shinagawa-ku, Tokyo, Japan
• Major Products
• Electronics
• Game
• Music
• Pictures
• Financial services
• Others
• Employees (Consolidated) 162,000 persons (as of
  March 31,2004)
• Consolidated Sales and Operating revenue (2003)
  
• 7,496,400 million yen (aprox. 55,000 million
  euros)

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WORLWIDE MANUFACTURING ACTIVITIES
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SONY EUROPEAN PRESENCE
Sony has presence in 40 European countries
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SONY EUROPE STRUCTURE
Source Sony France
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SONY FRANCE STRUCTURE
Source Sony France
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SONY FRANCE SALES
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WHY FRANCE?

• Since he founded Sony, Mr. Morita has been
  advocating the Global Localization policy which
  states that business should be deeply rooted in
  the local society
• Therefore, sales companies within Sony have to
  be established near the customers

There is no other specific reason apart from the
Global Localization Policy that explains why Sony
started a business in France
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PLANT LOCATION
As Sony France S.A. was established in 1973 Sony
received from the French government both at a
country and at a local level some economic
incentives such as reductions in taxe
professionelle, custom duty deductions, etc.
Such incentives had an important impact on the
location selection.
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MANAGEMENT AND CORPORATE CULTURE
In the RME business unit, the hierarchical
positions are filled in both by French and
Japanese managers, being the management style
predominantly European.
French
Japanese
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PERSONNEL COMPOSITION BY ORIGIN

• Sony France employs 2,600 people in its
  different offices and plants
• Since Sony established its activities in France,
  the number of Japanese people at the Sales
  Division was always lower than 10
• Japanese employees are regularly rotated (2-5
  years) based on their career development, their
  position and their performance
• Most French employees are transferred within
  Europe.

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RELATIONS WITH WORLD HEADQUARTERS

• Strong dependence in terms of product
  development (all RD function are located in
  Japan)
• Except OEM products, Sony Europe is not able to
  develop European customer oriented products but
  merely to sell products that Sony Japan prepares

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CLIENTS IN FRANCE RME division

• Main RME products
• Memory Sticks
• USB storage media
• DVD tapes
• VHS tapes
• CD-Roms
• Batteries

• Main Clients
• Supermarkets (Carrefour, Auchan, Monoprix, etc.)
• Department Stores (Printemps)
• Specialists (Darty, FNAC, etc)

Clients expect that Sony will keep providing
products that they can easily sell and that
consumers demand
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INTERNAL CLIENTS
The presence in France is undoubtedly
indispensable to satisfy clients demands. From
an internal point of view, the form of the
organization might be a possible drawback.
Generally speaking, once a company is
established, it has to trade with other Sonys
business units. Such trade could sometimes
require considerable efforts and be
inefficient. For instance, to carry out the
business in France Sony could have only a
representative office in France instead of the
current sales company.
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COMPANY VALUES
Sony contributes to the local society by making
it richer both in material and spiritual terms
through its products, which clients expect at an
appropriate price.

• In France, Sony contributes to the local society
  by adapting to the French culture and generating
  job opportunities.  
• Internally, Sony considers that values should not
  be installed, but created. In this aspect, Sony
  is completely different from other Japanese firms
  such as Toyota.

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CONSTRAINTS IN FRANCE

• While establishing itself in a foreign country
  Sony always considers cross-cultural
  communication such as language, sense of values,
  habits, religion etc. to be constraints.
• In France, the pride of local people for their
  country and national products is considerably
  high compared to other European countries and it
  could be consider as a constraint.

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KEY CONSTRAINT COSTS
The key costs of operating in France are higher
than operating in other European countries,
specifically in the following areas - Tax
Corporate tax is relatively high (35.4 in France
vs. 19 in USA) - Labor cost As annual working
hours are relatively low, the unit labor cost
(salary/working hours) is consequently high.
Labor-intensive industries could not ensure
competitiveness in France. Social Security costs
are also significantly high (45 vs. 18.7 in NY,
USA) - Dismissal Dismissal requires long
processes in France compared with countries such
as the UK. In France, it is impossible to dismiss
employees without economic reasons or breach of
duty. - Infrastructure Information
infrastructure was weak when Sony France was
established, but has been improved after
significant investment
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HR PRACTICES IN FRANCE

• Recruitment/Selection When Sony France started
  business, a French HR manager might have had a
  major role to recruit French employees
• Management Development Job rotation is carried
  out in Europe, but the HR of the original country
  that recruited an employee has stronger authority
  over his personnel issues.
• Promotion In France, promotion is mainly
  requested by employees themselves.
• Performance Appraisal Sony France uses yearly
  contract system for all employees at the
  beginning of a year, all employees determine
  their target mainly based on the result of the
  previous year consisting of five-grade evaluation
  after careful discussion with their superior.

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HR PRACTICES IN FRANCE

• - Compensation Salary range is fixed, based on
  job grade (e.g. marketing junior manager, junior
  product manager, product manager, senior product
  manager, general manager). In each range, salary
  consists of fixed part and performance-based
  part.
• Motivation As an incentive scheme, once a year
  director gives an award to the employees that
  achieve remarkable results. Each director
  nominates candidates and then the assessments of
  all candidates are discussed and adjusted in the
  board meeting.
• Communication Policies There are no special
  communication policies. As for meetings, the
  Board and managements meet on a regular basis.
  Other meetings are scheduled on a project basis.
• Training Training is mainly carried out as on
  the job training (OJT) in Sony.
• -       etc.

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When establishing itself in another country
every firm should try to understand the local
culture and at the same time make the most use of
local talents Mr. Yamaguchi RME Sony Europe
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Sources of information

• Mr. Masayoshi Yamaguchi
• Director Recording Media and Energy
• Sony Europe
• Sony Europe Financial Statements Fiscal year
  2003
• Sony Corporation Annual Report 2004