Today, the pursuit of profit and lower costs are a major issue for large global companies. Indeed the emergence of new technologies in business and the spending on research and development, logistics have become too high to bear. Thus, large firms have resorted to outsourcing some of their non-strategic activities.
Outsourcing, means the transfer of all or part of a business function to an external partner. Very often it involves outsourcing non-core and non-strategic activities (those that are not producing income) of a company. This is a strategic management tool which is reflected in the restructuring of a company around its sphere of activity, its basic skills, and its core craft.
Thus we can study an example of successful outsourcing through the Japanese company Sony. It was created on May 7, 1946, but took its current name in 1958. The development of Sony really took place in 1954 when it accumulated the global business (e.g.: Transistor fabrication and manufacture of radio receivers). Sony began its process outsourcing in the early 2000s. Today Sony represents a turnover of 63 million dollars, and employs about 160,000 people.
Its industries are varied because they relate to music, video games, phones, electronics, computers, cinema and audiovisual equipment. In addition, it has many subsidiaries such as Sony BMG, Sony Ericsson etc. Thus, in this paper, we will study the outsourcing process that Sony has set up, and discuss what activities have been outsourced? What are they and why is Sony outsourcing? This will allow us to see if it was beneficial or not for the Japanese company.
Sony has taken risks, leaving the implementation of some of these activities to other companies. We will first see that Sony has outsourced its activities by focusing on the method adopted (partially, partner).In the second step we will analyze the reasons why Sony has outsourced, while looking at the benefits that came as a result.
Tags: Profit and lower costs, Sony BMG, Sony Ericsson, music, video games, phones, electronics, computers, non-strategic activities
[...] This activity is quite expensive, and outsourcing will enable the generation of significant profits for the Japanese company. - Production of the PSP: Sony has chosen to outsource the assembly of the miniature game console to China, or outside Japan where the activity was previously performed. However, the key components of the console will still be produced in the country of the rising sun. Thus thanks to this, Sony was able to increase its production capacity in order to meet the ever increasing demand. [...]
[...] II / The reasons for outsourcing by Sony A / Outsourcing by Sony: the theory of transaction costs Sony has outsourced many of its activities. If we want to put his action in the theory of transaction costs, we can say that it has created a governance structure. Indeed some of its activities are carried out by partners with whom it has a stable and lasting relationship. However, each company is seeking to find the optimal governance structure to give itself the means of achieving a good outsourcing by every means. [...]
[...] I / Activities outsourced by Sony, and the ways in which they are outsourced A / Different types of outsourcing by Sony Sony is a world famous company that manufactures a large number of goods, and it is thus constantly in search of visible benefits and research productivity. Thus, the Japanese company has resorted to outsourcing. Sony outsources different segments of business which are not strategic. - Research and development: Sony has outsourced a segment of its business which is devoted to the research and development of display technologies FED (Field Emission Display). [...]
[...] In the same category of making a profit, we see that Sony has cut its operating costs and control. Thus it tries to reduce the costs which are normally incurred in-house, such as the costs related to research and development, outlined above, or marketing costs that are ultimately passed on to the customer. The provider can reduce structural costs by achieving economies of scale by leveraging its expertise. B / Other reasons for outsourcing by Sony The main reasons for outsourcing by companies: One can also find other reasons for outsourcing by Sony. [...]
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