Managing Innovation in Business

This report discusses the importance of innovation in business and focuses on Sony Corporation as a case study. It covers the organization's innovation history, existing performance, and capabilities. The report also includes an analysis of macro and micro environmental factors using SWOT analysis, PESTEL analysis, and Porter's Five Forces model.

Managing innovation in
business

Table of Contents
INTRODUCTION ..........................................................................................................................4
The organisation and industry overview .........................................................................................4
The organisation and its innovation History ..............................................................................4
The organisation existing innovation performance and capabilities ..........................................6
The industry ...............................................................................................................................7
CONCLUSION ...............................................................................................................................8
References........................................................................................................................................9

INTRODUCTION
The present report is based upon audit analysis for conducting an innovation audit for a
company. These selected company for completing this project is Sony corporation. This is a
Japanese multinational conglomerate corporation that has headquarters in Konan, Tokyo. This
company has diversified businesses in several sectors such as gaming, professional electronics,
financial services, etc (Dhillon, and Gupta, 2015). This report includes organisation innovation
history, activities of innovation as well as future innovation needs. Also, there is discussion
about macro and micro environmental environment factors like SWOT analysis, PESTEL
analysis, Corporate report 2019 and Porter's Five forces model.
The organisation and industry overview
The organisation and its innovation History
Sony Corporation came into existence when World War II started. Akio Morita the
founder of Sony was born in Nagoya, Japan in 1921. He was the oldest son and it was expected
of him to join the family business. Two men Morita and Masru Ibuka decided to setup a business
together. In year 1946 Sony was established with a capital of ¥ 190,000 and 8 employees in a
department store building in Tokyo. The company got its name “Sony” in 1958. Sony has a
diversified business and it deals in music entertainment business, electronics, gaming, financial
services and entertainment (Dodgson, and Gann, 2018). Sony has created its name for new
recording and storage technologies, instead of copying from the competitors. Sony has launched
a number of recording formats which included Floppy Disk, Compact Disc and Blu- ray. It also
launched Betamax Videocassette recording, VHS, JVC, Video8format in video recording. In the
range of flash memory it launched Memory stick, Flash Memory cards, Secure Digital cards,
Memory Stick Duo and Memory Stick Micro.
Current slogan of Sony is Be Moved , other than this they also had slogans like The One
And Only, It's a Sony, Like. No. Other, Make. Believe. Sony also ranked a 97th position in
Fortune Global 500 list in the year 2018. Sony has proven itself in innovation. From 1950
onwards it has launched a number of products all technologically advanced when compared to
competitors at their respective time (Furue, and Washida, 2017).

Innovation of Sony Home Audio
TYPE G:
The first ever tape recorder which used a tape of 19cm for every single second was
launched by Sony in 1950. It was called Type G. Reel tapes of diameter up to 10 inches could be
played in this tape (Garcia, 2015). It was initially used in Court and by other government
branches which gave it the name 'Type G' G standing for government.

H-1:
This was extension of Type G of Sony but for personal use by consumers. Launched in
the year 1951 this recorder had a wooden case around it so that it cold be kept in houses and also
made it easy for travel overseas. I weighed 13 kg.
TR-55
Sony have made a lot of innovations in field of radios. In year 1955 itself Sony came up
with a transistor, first in Japan which had 5 transistors developed internally. It then became
antecedent of portable radio .
TR-63
In year 1957 Sony again brought into world its first ever pocket size transistor audio. It
was called TR-63 and considered to be worlds smallest transistor. It was another milestone for
Sony providing the best in smallest package.
STR_DH710:
In year 2010 Sony launched a new product that was a Home Theatre A/V receiver which
could support HD components including 3D and ARC.
TA-DA5700ES:
Just another year and Sony came up with another very new innovation. In year 2011
Sony launched a system which consisted of 9.1 inch playback-compatible amplifier integrated
with 7 channels equipped with its very own 'sound optimizer' correction technology. Sony was
the first company to bring out such innovation.
The organisation existing innovation performance and capabilities
VRIO Model
VRIO Framework is a tool used to investigate the company private assets and efficiency
to find out if they can be a source of sustained competitive advantage (Gershon, 2016). This tool
is used on Sony Corporate in the market. The VRIO model for Sony corporation is mentioned
below-

Innovation Valuable Rare Imitable Organisatio
n exploited
Competitive
implication
Patents Yes No No No No
Distribution Yes Yes No Yes Yes
Employees Yes Yes No No No
Financial Yes Yes Yes Yes Yes
Food
production
Yes No Yes No No
It has been concluded from the VRIO model that Sony corporation is effectively working
in the distribution and financial area. It is able to make good profits and sales within less time.
This company has of the VRIO Sony Framework we can see that the Distribution and Financial
are maintaining a great competitive advantage (Glowik, 2016). The main disadvantages that this
company is having are Food product, employees and patents.
SWOT analysis
Strengths Weaknesses
 Sony Corporation is a strong brand as it
has been working successfully since
many years. As per a survey in 2011, it
was marked as the most valued brand in
Asia (Sony Corporation, 2020).
 Sony corporation is also entering into
entertainment industry with Sony
Music and Sony Pictures.
 The television business of Sony is
facing tremendous competition from
LG and Samsung and is losing market
shares to them.
 Diversification has led Sony to
distortion of its brand. The presence in
smartphone industry of Sony is very
weak.
Opportunities Threats
 Sony has great opportunity of
venturing into healthcare sector. This
can be possible by acquiring some
stakes of Olympus.
 Sony can invest in new emerging
markets such as Africa. The growing
income has made it possible for people
 Emerging of low cost competitors is a
threat for the company. Budget brands
are coming up with quality products at
reasonable prices.
 The online network of Sony is also
facing threat. Play station network of
Sony has been hacked which led to

in Africa to afford expensive gadgets
(Klingebiel, and Joseph, 2016).
leakage of customers personal data.
From the SWOT analysis of Sony corporation, it has been analysed that this company has
captured music lovers since many years. It provides great services and products to people
(Velez-Castrillon, and Angert, 2015). Sony is using new technology and latest equipments for
providing customers with new experience of music.
PESTEL analysis of Sony
Political factors:
Sony has been dealing in more than one country over a long-time now. So the political
factors of each country and nation it deals with effects Sony Corporation significantly. Some of
the political factors Sony needs to keep in mind are Intellectual property protection, contract
enforcement framework, Anti trust laws related to their products etc. Moreover, running business
in different countries also lead Sony to disperse its products into various cultures which then also
helps company to attain mercy and help from various political parties.
Economic factors:
Economic factors can adversely effect the business of an organization. Sony has a great
opportunity and it can grow along with the growth of an economy. Some of the economic factors
Sony needs to consider are economic growth rate,inflation rate, interest rates, exchange rate
stability, infrastructure quality in electronic industry, skill level of labour in the respective
industry, education level etc.
Social factors:
Social trends have major effects on the sales and revenue of a business. The changing
trends and usage of gaming as a fun activity has proved to be very profitable for Sony. Also in
the developed nations where people already earn enough need new medium for entertainment.
Sony has a good hold in this respective industry. So Sony requires to keep a check on changing
social trends and keep updating their products and services accordingly.
Technological factors:
The core competency of Sony lies in technological sector. Every new product of Sony
needs to use the latest technology. Sony spends a lot of amount on Research & Development.

The need for investing in better technology does not only limits to the products and services. But
this concept has now extended to marketing , sales and customer service as well.
Legal factors:
Whenever a company plans to go overseas for business a thorough study of legal
framework of the nation needs to be its first step. Sony must consider discrimination laws,
employment laws, data protection, copyright or patent laws, health and safety law etc. of the
country it wants to venture into. If any of the rules and regulations of above mentioned laws are
not abided by, may lead to loss of profits for SONY.
Environmental factors:
Another important task for a business is to take care of environment it is working in,
which also provide the business with various resources it needs. Many companies do it in order
to attract consumers. Sony is working towards ways to reduce carbon omission in atmosphere.
Sony also has an environmental plan called Green Management 2020. Waste management,
recycling of products, keeping a check on water and air pollution emitted during manufacturing
etc. are various areas on which Sony must focus in order to fulfil its duty towards the
environment.
The industry
Audio equipment industry consists of companies that will operate by producing,
manufacturing and supply of audio equipments which are meant for audio purpose. Live music
has grown within these years and movies have enhanced the audio technology. There is a lot of
change within music industry since the day music instruments and equipments came into
existence. Sony corporation is one of the oldest company that has been working with latest
technology in the music industry and it is globally known. Sony Corporation is launching its very
own Audio Technology late this year. The product will be called 360 Reality Audio technology.
This name 360 came from the feature in which it provides the listener with music tracks playing
in a virtual spherical environment around them. For this launch Sony came up with many new
partners such as Amazon Music HD, Tidal, nugs.net etc. This is a major step of Sony towards
providing its customers with all new concepts an experiences in entertainment field. The
majority of audio equipments are developed in different countries. Also, it is important
information that this music company is doing well within market by adopting latest technology
and providing customers new experience of music (Xu, and Muneyoshi, 2016). The audio

industry has seen lot of development since the day it was established. Sony company is always
looking for new ways for amplifying music and fostering diversity of listening options. The
immersive audio tier of Sony will help in providing a new experience to the world of music.
Different customers that have used this technology are supporting this as it is giving them good
experience. The 360 reality Audio uses object based spatial technology that gives an immersive
music experience and this feels like hearing music in concert. The features of 360 Reality Audio
Ecosystem of Sony are mentioned below -
Content creation – Sony will provide content creation tools that have major music labels
for preparing and augmenting music into 360 reality audio content.
Distribution format – Sony is planning to release format optimised for distributing
music. The distribution used by Sony is Fraunhofer IIS.
Services for distributing compatible content – The plan is for distributing this reality
audio compatible content on premium plans that are offered by music distribution services.
Compatible devices – Sony is always involved in developing new technology audio
devices for supporting music content (Zilber, and De Abreu Jr, 2016). This emphasises on using
latest technology.
CONCLUSION
From the above discussion, it is analysed that innovation is very important part of any
organisation. Sony is a well reputed organisation which is providing services across the world.
There are various models used for analysing macro and micro factors that affects business such
as VRIO Model , SWOT analysis and PESTEL analysis. These models help in knowing which
innovation is best for the company. It is helpful in increasing sales and profit of the company.

References
Books & Journals
Dhillon, I. and Gupta, S., 2015. Organizational Restructuring and Collaborative Creativity: The
Case of Microsoft and Sony. IUP Journal of Business Strategy, 12(1).
Dodgson, M. and Gann, D., 2018. Innovation: A very short introduction. Oxford University
Press.
Furue, N. and Washida, Y., 2017. Scanning and design thinking: organizational roles for
innovation. Foresight.
Garcia, R., 2015. Types of innovation. Wiley Encyclopedia of Management, pp.1-9.
Gershon, R.A., 2016. Digital media and innovation: Management and design strategies in
communication. Sage Publications.
Glowik, M., 2016. Market Entry Strategies: Internationalization Theories, Concepts and Cases of
Asian High-Technology Firms: Haier, Hon Hai Precision, Lenovo, LG Electronics,
Panasonic, Samsung, Sharp, Sony, TCL, Xiaomi. Walter de Gruyter GmbH & Co KG.
Klingebiel, R. and Joseph, J., 2016. Entry timing and innovation strategy in feature
phones. Strategic Management Journal, 37(6), pp.1002-1020.
Velez-Castrillon, S. and Angert, C., 2015. How Sony Got its Groove Back: A Case Study in
Turnaround Management. Business Education Innovation Journal, 7(2).
Xu, F. and Muneyoshi, H., 2016. Product Innovation Versus Business Model Innovation: The
Case of the Walkman and the iPod. In ICIE 2016 Proceedings of the 4th International
Conference on Innovation and Entrepreneurship: ICIE2016 (p. 281). Academic
Conferences and publishing limited.
Zilber, S.N. and De Abreu Jr, O.F., 2016. The music industry business model after internet:
effects of innovation. International Journal of Business Innovation and Research, 10(4),
pp.543-562.
Online
Sony Corporation. 2020.[Online].Available
through:<https://www.fool.com/investing/general/2012/03/02/sony-corporation-strengths-
weaknesses-opportunitie.aspx>