Published on January 18, 2009
Slide 1: Sony Ericsson Joint Venture: By: Adeel Ali Slide 2: Joint Venture: A joint venture is an entity formed between two or more parties to undertake economic activity together. In a Joint Venture, the parties (generally 2) agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. The venture can be for one specific project only, or a continuing business relationship such as the Sony Ericsson joint venture. Slide 3: Reasons for forming a Joint Venture Internal reasons Strategic Goal Build on company's strengths Synergies Spreading costs and risks Transfer of technology Improving access to financial resources Diversification Economies of scale and advantages of size Access to new technologies and customers Access to newer managerial practices Competitive goals Influencing structural evolution of the industry Pre-empting competition Defensive response to blurring industry boundaries Creation of stronger competitive units Speed to market Improved agility Slide 4: Introduction to Sony (logo) Sony Corporation is a Japanese multinational conglomerate corporation with revenue of $70.303 billion (as of 2007) based in Tokyo. One of the leading manufacturers of electronics, video, communications, gaming consoles and information technology products for the consumer and professional markets, which developed the company into one of the world's richest companies. Sony Corporation is the electronics business unit and the parent company of the Sony Group. Its principal business operations include: Sony Corporation (Sony Electronics in US) Sony Computer Entertainment (Gaming consoles) Sony Pictures Entertainment (Movies) Sony BMG Music Entertainment (Music) Sony Ericsson (Mobiles) Sony Financial Holdings (Financial Services) Slide 5: Introduction to Ericsson (logo) Ericsson is a leading Swedish-based provider of telecommunication and data communication systems, and related services covering a range of technologies, including mobile phones. Founded in 1876 as a telegraph equipment repair shop by Lars Magnus Ericsson, it was incorporated on August 18, 1918. Since the mid 1990s, Ericsson's extensive presence in Stockholm helped transform the capital into one of Europe's hubs of information technology (IT) research. Throughout the 1990s, Ericsson held a 35-40% market share of installed cellular telephone systems. Like most of the telecommunications industry, LM Ericsson suffered heavy losses after the telecommunications crash in the early 2000s. The handsets division got a fresh start in 2001 in the form of a joint venture with Sony called Sony Ericsson. Slide 6: Sony Ericsson (logo) Sony Ericsson is a joint venture established in 2001 by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. The mosy widely known reason for this venture is to combine Sony's consumer electronics expertise with Ericsson's technological leadership in the communications sector by creating exceptional handsets. The company's global management is based in Hammersmith, London, and it has research & development teams in Sweden, Japan, China, Germany, the United States, India and the United Kingdom. Sony Ericsson has approximately 8,000 employees worldwide. Slide 7: Early hurdles Inception of Sony Ericsson: 2001 Continous losses reported till Q2 2003 quarter after another Market share fallen from 9% to 6% Q1 2003: Revenues fell from 1.1bn (Q1 2002) to 806mn euros Pressure from parent companies to attain profitability or face closure Regardless of the continuous under achievment, experts were still confident of resurrection. ROAD TO SUCCESS Slide 8: Turn of fortunes Sony Ericsson posts its first profits in Q4 2003 since inception Sony Ericsson attains well over 9 % of the market share in Q2 2007 Additional expense of trademark royalty fees paid to the parent companies recorded for the first time in Q2 2007 Jan 2007, Sony Ericsson announces setting up production plants in India to meet the growing market Sony Ericsson scores continues scoring profits in Q1 2008. Slide 9: Financial Information Sony Ericsson posted its first profit in the second half of 2003. Since then, the sales figures from phones have been: 2004: 42 million units 2005: 50 million units 2006: 74 million units 2007: 103.4 million units Sony Ericsson sold 60m music enabled phones in 2006 underlining how its products are more popular than Apple's iPod. Apple sold 46m iPods in 2006. According to the Swedish Magazine M3s issue 7/2006 Sony Ericsson is the best-selling phone brand in the Nordic countries, followed by Nokia. Slide 10: CONCLUSION With a 43% annual growth rate, it became the fastest-growing mobile vendor in Q3 2006 compared to Motorola with a rate of 39%. In 2007, Sony Ericsson had surpassed Nokia to become the most profitable mobile phone maker in terms of net profit rate. Sony Ericsson continues eating into the market share of the market leaders and experts still have faith in it to break the eternal leadership of Nokia in the industry with its ever growing innovation in mobile technology.