Sonny Ericson's Evaluation of the Alliance and its Performance

Evaluation of the Alliance and Its Performance

IN A NUTSHELL, both Sony and Ericsson joined forces with the end in mind of generating more profits than if they had struck it out by themselves in the telecommunications business. The financial statements show a failure of the Sony Ericsson brand of company to cope with the aftershocks of the current depression enveloping the entire earth. However, this leader in the mobile phone industry is expected to bounce back to its old self after the depression evaporates into thin air probably by 2011. Conclusively, the company is on the right track in producing new mobile phone models each year to fill the needs of its current and prospective clients. The Sony Ericsson co opting alliance was mainly due to the pooling of the resources of both companies to derive economics of scale or limit its risk (Lorange & Chakravarthy 2007, 94).

Why Sony and Ericson decided to ally?

Sony and Ericsson were struggling hard before their alliance in 2001. Both companies did not perform well financially on their own. The combined forces resulting to the installation of the Ericsson logo on Sony cell phones. This immediately increased the cell phones sales figures (Hisrich, 2000, 15). One of the initial marketing strategies of Sony Ericsson was to sell its camera phones in 2003. This T610 camera phone immediately sold like hotcakes when sold in the market. The T610 black and silver phones were immediate success stories. The company increases its mobile phone models to more than thirty -five in order to increase its sales figures (Gall, 2006, 293). The James Bond movie, Casino Royale, featured the Sony Ericsson mobile cyber shot phone unit. The success of these mobile phones was due to the many features it offered. The mobile phones included such features as MP3 players, and cameras. The company also increased its customer base by including Google Blogger facility on its Cyber shot phone which enables the mobile phone users to create their own blog and to post photographs on it in just two or three keystrokes (Henry, 2008, 2238).

Sonny Ericson Company profile

Company Profiles

The alliance between Sony of Japan and Ericsson of Sweden is geographical. functional and product based. Sony had a low sales performance before the merger with Ericsson in 2001. The merger immediately catapulted Japan’s Sony phone sales because the customers of Ericsson saw a strong alliance between the expertise of Sony and the Expertise of Ericsson. This is what synergy is all about (Anderson et al.,1984, 134) Synergy is defined as the one plus one is equal to more than two (Churchill & Peter,1995,192). The exchange of customer information, production knowledge and marketing strategies plus the established customer base of one alliance partner is being bolstered by the attachment of the name of its alliance partner when entering into the other partners’ established market segment (Ingram, 2004,63)

The alliance between Sony of Japan and Ericsson of Sweden is also functional. The features of Sony’s expertise in technology are being permeated into the products of Ericsson. In the same light, the features of the Ericsson quality products are being fused into the Sony products. The marriage of the functions of both alliance partners created a strong demand for their new products. The Sony Ericsson mobile phones are equipped with cameras, MP3s and Java games, clock, and other features resulting to the increase in the demand for their products (Solomon,2003,175).

The alliance between Sony of Japan and Ericsson of Sweden is also product based. Sony Ericsson is selling a product that is a necessary. It is one of the basic needs of man, with due respect to Maslow’s hierarchy of needs. A manager needs to mobile phone to talk to the branch manager on the other line while travelling in an airplane. The production manager needs the mobile phone to contact the market manager in another city to determine the number of products to be manufactured while the production manager is in a board of directors’ meeting. The teenagers need the mobile phone to take pictures of his group swimming, dancing or drinking the night away. The mothers gives her ten year child a mobile phone so he could contact her inside the classroom to inform her that classes have been dismissed early and he wants to be fetched (Hughes et al., 1998,95).

Sonny Ericson Industry Analysis

Industry Analysis

Sony and Ericsson were struggling hard before their alliance in 2001. Both companies did not perform well financially on their own. The combined forces resulting to the installation of the Ericsson logo on Sony cell phones. This immediately increased the cell phones sales figures (Hisrich, 2000, 15). One of the initial marketing strategies of Sony Ericsson was to sell its camera phones in 2003. This T610 camera phone immediately sold like hotcakes when sold in the market. The T610 black and silver phones were immediate success stories. The company increases its mobile phone models to more than thirty -five in order to increase its sales figures (Gall, 2006, 293). The James Bond movie, Casino Royale, featured the Sony Ericsson mobile cyber shot phone unit. The success of these mobile phones was due to the many features it offered. The mobile phones included such features as MP3 players, and cameras. The company also increased its customer base by including Google Blogger facility on its Cyber shot phone which enables the mobile phone users to create their own blog and to post photographs on it in just two or three keystrokes (Henry, 2008, 2238).

One of the officers of Sony Ericsson believes that the communications product sales had increased because many people prefer to hide their photographs, songs, and other items in their mobile phone units. The cell phones also include a camera to take and keep pictures of friends and families. The younger generation would use the Sony Ericsson to record and share internet music downloads (Henry, 2008, 2238). The middle of the 1990s showed that the European mobile industry started to mushroom and sales growth was phenomenal. A newly established large consumer electronics company had poised a challenge to the current market players (Hoover, Elorante, 2991, 65).

Sony Ericsson Mobile Communications is one of the world’s largest leading mobile phone brands. The alliance hired six thousands workers around the world five years after the company was born out of the wedlock of Sony of Japan and Ericsson of Sweden. The company has grown from its early beginning be one of the most successful consumer electronics brands in their market segment. Its success is due to its innovative way of introducing products that are considered first in the telecommunications market (Flickenger, 2003, 21). Its marketing strategy is founded on its customer insights and a passion for strategic marketing. The alliance of Sony and Ericsson is based on trust. Both sides have invested their time, energy and money to the merger with the hope that synergy will bring more cash inflows into the alliance than if both Sony and Ericsson struck it out in the business world on his own (Barnes,2003,14).

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Financial measures of Sonny Ericson Alliance

Financial measures of this Alliance

Sony Ericsson did not do financially well if net income is used as a basis for deciding whether the company passed its benchmark with flying colors. The net income for quarter 4, 2008 is a loss of 187 millions. The company also generated a net loss of 25 million for the third quarter of 2008. In addition, the net income for the fourth quarter of 2007 is a profit of 373 million. The annual net income of Sony Ericsson for 2007 is1,114 million. On the other hand, the net income for the year 2008 is a loss of 73 million. This clearly shows that there seems a decline in the demand for mobile phone during the year 2008 as compared to the prior year, 2007.