Mkt421_Marketing_-_Environmental_Factors

Environmental Factors MKT421 Marketing STUDENT University of Phoenix INSTRUCTOR DATE Environmental Factors The Sony Corporation is a leading manufacturer of video, audio, communications, and information technology products for consumers and professional markets. Naval lieutenant Akio Morita and defense contractor Masaru Ibuka founded Sony in 1946 by establishing a partnership with $500 in borrowed capital and named their partnership as Tokyo Telecommunications Engineering Corporation (TTK). During the first year TTK made a profit of $300 and total sales of $7,000. In the next few years, Ibuka and Morita abandoned the home-appliance market and focused on new electronic goods Constantly looking for new technologies, TTK started the production of transistors radios, called "Sony" in 1954. The popularity of the radio "Sony" encouraged Ibuka and Morita to change the name of the company to Sony Corporation in 1958. Since then Sony climbed the ladder of the success and reached its top in 1990 when it registered a record earnings of 58.2 billion yen, which is an increase of 38.5% compared to the previous year. Sony's success was a direct result of its founders who could anticipate the demands of consumers and develop products that have met their wants and needs (Funding Universe, n.d.). Additionally, with the arrival of faster communication, transportation, and financial flows, Sony could expand into international markets and become a global firm. A global firm is "one that, by operating in more than one country, gains marketing, production, R&D, and financial advantages that are not available to purely domestic competitors" (Armstrong & Kotler, 2009, p. 451). However, global firms such as Sony are exposed to environmental factors (e.g. economic, political, cultural, technological and so forth) that increase the risk and jeopardize the company's success. In this research paper several environmental factors that affect global and domestic marketing decisions will be discussed with a closer eye to those factors affecting Sony Corporation. Effect of Political Systems and the Influence of International Relations The political legal environment may differ from country to country. A firm, that is considering conducting business in a specific country, should certainly consider the government bureaucracy, political stability, monetary regulation, and country's attitude toward international trades. Many countries are in favor of foreign companies; however, a few others are not so accommodating. Sony and other large corporations do not have any interest in promoting their products in those countries with unstable and weak governments because it increases the risk of conducting a business. Sony should also consider the monetary regulation of the country in where it wants to promote its products. The idea is to make profits in a currency of value to Sony Corporation. Furthermore, some emergent countries may not have sufficient monies to pay for their purchases from other countries. So, Sony should familiarize with practices such as countertrades to exchange goods with other goods instead of using cash (Armstrong & Kotler, 2009). Influence of Cultural Differences Another environmental factor that affects global and domestic marketing decisions is the cultural environment. Indeed, each country has its own norms, taboos, and folkways. Global firms should comprehend how culture influences consumers' reactions and how they think of a products and how they use it. Sony's culture is centered on a spirit of freedom, open-mindedness, and a fighting spirit to innovate. Indeed, Masaru Ibuka always has wanted to create innovative products that motivate new lifestyles. Additionally, Ibuka inspired a spirit of challenge by making products that had not yet existed and a strong will to make people happy. This is Sony’s DNA that still thrives nowadays and tries to pass to its employees and customers (Sony Corporation, 2011).However, Sony realized that cross-cultural differences may affect negatively its work environment; that is why Sony has hired an outside firm to train its workforce to overcome such differences. The Sony Corporation wanted to address misunderstandings and differences from the beginning as it helps Sony to increase its productivity and to dissolve any hostilities that may arise from cultural differences in its work environment (Cengage Learning, 2004). The effect of Technology Technology is one of the strongest factors that can shape people's lives and marketing decisions. Indeed, cell phones, the Internet, video games are reducing social interactions as people can watch movies and listen music on their cell phones. Marketers monitor four main trends in technology prior making any decisions. The four trends are: the unlimited opportunities for innovation, the increased regulation of technological change, varying R&D budgets, and the accelerating pace of change. The Sony Corporation realized that rapid technological changes shortened its products' life cycles. Additionally, high price fluctuations of devices made hard to Sony to stabilize its profits. So, Sony's marketing department introduced a new sale SCM system; the system is connected to its business processes such as manufacturing, distribution, and sales. Sony's goal was to make its structure more flexible and improve its customer service level (Fujitsu Corporation, 2004). Global Economic Interdependence and the Effect of Trades Practices Sony and other large corporations, prior deciding whether to conduct business in another country, should familiarize with the international trade system. Indeed, foreign countries can force a global firm to pay tariffs (taxes imposed on certain products) and set quotas (limits on the number of products that can be imported). Oftentimes, American global firms may face biases and excessive restrictions such as China's protectionist regulations that limited the access to various Chinese markets. At the same time, the presence of trade practices and agreements come in support of international trades. A few examples are: The General Agreement on Tariffs and Trade (GATTS) and regional free trades zones or economic communities such as European Union (UE) and the North American Free Trade Agreement (NAFTA). Sony and other large corporations before deciding whether to conduct business in another country should also familiarize with its economy. More specifically, income distribution and the country's industrial structure are two factors that may attract or push away foreign firms to invest in that specific country. Indeed, struggling economic conditions can jeopardize the company's growth. For instance, several months ago Sony Corporation as a result of the economic recession had to lay off 80,000 employees. In addition to rigid budget cuts, Sony decided to "lower its investments by $1.1 billion especially in those areas where success was not overwhelmingly met" (Asia Economic Institute, 2011, para. 1). Importance of Demographics and Physical Infrastructure Population, the limited presence of resources, and physical infrastructures are additional factors that markets monitor very closely. Indeed, marketers pay attention to the size and growth rate of population in specific cities, states or countries. Additionally, they pay attention to age distribution, ethnic mix, educational levels, household patterns, and population movements. Prior making global marketing decisions, marketers look at the resources and physical infrastructures that a country has to offer. Indeed, oil, coal, platinum are nonrenewable resources and firms that produce goods that require raw material that is scarce on a specific country can expose the firm to outrageous cost increases. Sony Corporation has announced recently its "global plan for reaching a zero environmental footprint by 2050 called Road to Zero, that outlines a specific set of goals and establishes internal targets to reach by 2015 based on four environmental perspectives and six product life cycle stages" (Miner, 2010, para. 1). The environmental perspectives include climate change, resource conservation, control of chemical substances and biodiversity. The six product lifecycle stages include: business operations, take back and recycling, research and development, product planning and design, distribution and procurement. Sony's idea is not only to support the environment but also to reduce the dependency of its products to scarce resources. The Influence of the Foreign Corrupt Practices of 1977 and Other Legislations Sony, as well other global firms, is subject to various legislations such as the Foreign Corrupt Practice Act (FCPA) of 1977. FCPA was enacted by the United States and other 33 countries to fight the bribery of foreign officials, reduce corruption, and money laundering via global financial system. Indeed, statistics showed that approximately 400 American firms have spent $300 million in bribes and other shady payments to foreign governments. FCPA represents an addition to other legislation already in place such as the Sarbaners Oxley Act "which also requires firms to operate effective systems of control and come clean about instances of fraud" (Global World Check, n.d.). Importance of Social Responsibility and Ethics Versus Legal Obligations Every firm whether it is operating domestically or internationally, has ethics, legal and social obligations. More specifically, legal obligation refers to obey local, federal, state, and international laws. Ethical obligation refers to meet social expectations, which are not translated in laws. Social responsibility is “the obligation toward society assumed by business" (Bateman & Snell, 2009, p. 181). For instance, "ethical businesses conduct and compliance with applicable laws and regulations are fundamental aspects of Sony's corporate culture" (Sony Corporation, 2011, para. 1). Sony has established a Global Compliance Network comprised of the Compliance Division at the corporate headquarters and regional offices around the world; adopted and implemented the Sony Group Code of Conduct, and set up Compliance Hotline systems through its Global Compliance Network. The goal was to reinforce Sony's worldwide commitment to integrity and provide resources to its employees when they raise concerns or look for guidance regarding legal, ethical, and social issues (Sony Corporation, 2011). Conclusion Nowadays firms are global; in fact they have worldwide locations. The presence of global firms has increased thanks to technological advancement such as the Internet. However, global firms must to comprehend the global marketing environment, especially the factors that can significantly affect marketing decisions. The list of environmental factors includes cultural, technological, demographics, economic, legal, and political ones. Armstrong & Kotler (2009) stated that "given the potential gains and risks of international marketing, companies need a systematic way to make their global marketing decisions" (p. 472). No other firm better than the Sony Corporation could help understand in this research paper the above environmental factors, the benefits offered by global marketing, and the risks that can jeopardize Sony's success. References Armstrong, G. & Kotler, P. (2009). Marketing: An introduction (9th ed. ). Upper Saddle River, NJ: Pearson. Asia Economic Institute (2011). Sony struggle in midst of Japanese recession. Retrieved on May 26, 2011 from http://www.asiaecon.org/special_articles/read_sp/12095. Bateman, T.S. and Snell S. (2009). Management: leading and collaborating in the competitive world (8th ed.). New York, NY: McGraw-Hill/Irwin. Cengage Learning (2004). Globalization of human resources. Retrieved on May 26, 2011 from http://www.swlearning.com/management/hrm_news/hrm_news_globalization.html. Fujitsu Corporation (2004). Customer success. Retrieved on May 26, 2011 from http://www.fujitsu.com/downloads/PRMPWR/casestudy/casestudy-20051207.pdf. Funding Universe (n.d.). Sony corporation. Retrieved on May 26, 2011 from http://www.fundinguniverse.com/company-histories/Sony-Corporation-Company-History.html. Global World Check (n.d.). FCPA - Foreign corrupt practices act. Retrieved on May 26, 2011 from http://www.fcpa.us/. Miner, T. (2010). Sony shoots for zero environmental footprint. Retrieved on May 26, 2011 from http://www.sustainablelifemedia.com/content/story/strategy/sony_shoots_forzero_footprint. Sony Corporation (2011). Compliance. Retrieved on May 26, 2011 from http://www.sony.net/SonyInfo/csr/compliance/index.html. Sony Corporation (2011). Culture. Retrieved on May 26, 2011 from http://www.sony.net/SonyInfo/Careers/culture/index.html.