Al-Azhar university – GAZA

Faculty of economic and administrative science

Department of business administration
International Business

INDUSTRIAL ANALYSIS
for
SONY

/ PREPARED BY
AHMED M. SHALTOOT

/ UNDER SUPERVISION
DR. BELAL EL-BASHITI

2010-2011

1
Company Name

Sony Corporation

Founded

May 7, 1946

Headquarters

1-7-1 Konan, Minato-ku, Tokyo 108-0075, Japan

Representative Corporate Executive Officers

Chairman, CEO and President

• Howard Stringer

Vice Chairman

• Ryoji Chubachi

Executive Deputy President and CFO

• Nobuyuki Oneda

Major Products

Audio

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 • Home audio, portable audio, etc.

Video

• Video cameras, digital still cameras, and DVD-Video players/recorders, and Digital-
broadcasting receiving systems

Televisions

• LCD televisions, projection televisions, CRT-based televisions, etc.

Information and communications

• PC, printer system, broadcast and professional use audio/video/monitors and

other professional-use equipment

Semiconductors

• LCD, CCD and other semiconductors

Electronic components

• Optical pickups, batteries, audio/video/data recording media, and data recording

systems

Locations of Major Offices and Research Centers (in Japan)

• Tokyo, Kanagawa, Miyagi

Headcount (Consolidated)

171,300 (as of March 31, 2009)

Consolidated Sales and Operating revenue

7,730,000 million yen

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Introduction
Generally, Totsuko was started by 2 talented Engineer, Masaru Ibuka and Marketing
Innovator, Akio Morita in 1946 in Japan. The company name was later changed to SONY
in 1958. From 1950 to 1999, SONY introduced many innovative products; many of the
world’s first technology and even created a robotic dog named Aibo.

what is Sony’s mission ?

SONY mission is to create things for every kind of imagination and involve them in
people’s daily life. In addition, interconnected multimedia technology is always SONY’s
promise to the people.

what is Sony’s vision ?

Sony recognizes the importance of preserving the natural environment that sustains life
on earth for future generations and helps humanity to attain the dream of a healthy and
happy life. Sony is committed to achieving this goal by seeking to combine ongoing
innovation in environmental technology with environmentally sound business practices.
Sony aims for greater eco-efficiency in its business activities through maximizing the
efficiency of energy and resource use and providing products and services with greater
added value. Efforts will focus on reducing harmful effects on the environment by
ensuring compliance with all applicable environmental regulations and reducing the
environmental impact of energy and resource use on a continuing basis.

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: In this research I will try to market Sony in the two country, which are

Egypt.1
Economy – overview

Occupying the northeast corner of the African continent, Egypt is bisected by the highly
fertile Nile valley, where most economic activity takes place. Egypt's economy was
highly centralized during the rule of former President Gamal Abdel NASSER but opened
up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni
MUBARAK. Cairo from 2004 to 2008 aggressively pursued economic reforms to attract
foreign investment and facilitate GDP growth. The global financial crisis slowed the
reform efforts. The budget deficit climbed to over 8% of GDP and Egypt's GDP growth
slowed to 4.6% in 2009, predominately due to reduced growth in export-oriented sectors,
including manufacturing and tourism, and Suez Canal revenues. In 2010, the government
spent more on infrastructure and public projects, and exports drove GDP growth to more
than 5%, but GDP growth in 2011 is unlikely to bounce back to pre-global financial
recession levels, when it stood at 7%. Despite the relatively high levels of economic
growth over the past few years, living conditions for the average Egyptian remain poor.

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: Here we will take a look at some of economic fact regard Egypt *

Economy of Egypt

Cairo skyline, as seen from the Cairo Tower

Rank 27th
Currency (Egyptian pound (EGP
Trade organizations WTO
Statistics
GDP (.billion (2010 est $500.9
GDP growth (.est 2010) 5.3%
GDP per capita ( .est 2010 ) $6,200
GDP by sector (.agriculture: 13.5%; industry: 37.9%; services: 48.6% (2010 est
CPIInflation (.est 2010) 12.8%
Population
(.est 2005) 20%
below poverty line
Gini index (2001) 34.4
Labour force (.million (2010 est 26.1
Labour force
(.Agriculture (32%), Industry (17%), Services (51%) (2001 est
by occupation
Unemployment (.est 2010) 9.7%
Textiles, Food Processing, Tourism, Chemicals, Pharmaceuticals,
Main industries
Hydrocarbons, Construction, Cement, Metals, Light Manufactures
Ease of Doing
94
Business Rank
External
Exports (.billion (; 2010 est $25.34

Crude oil and Petroleum products, Cotton, Textiles, Metal Products,

Export goods
Chemicals, Agricultural goods

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 United States 7.95%, Italy 7.26%, Spain 6.78%, India 6.69%, Saudi
Main export partners
(Arabia 5.53%, Syria 5.3%, France 4.39%, South Korea 4.27% (2009

Imports (.billion (; 2010 est $46.52

Machinery and Equipment, Foodstuffs, Chemicals, Wood products,
Import goods
Fuels

United States 9.92%, China 9.63%, Germany 6.98%, Italy 6.88%,

Main import partners
(Turkey 4.94% (2009

FDI stock (.billion (31 Dec 2010 est $72.41

Gross external debt (.billion (31 Dec 2010 est $30.61
Public finances
Public debt (.of GDP (2010 est 80.5%
Revenues (.billion (2010 est $46.82
Expenses (.billion (2010 est $64.19
Foreign reserves (.billion (31 Dec 2010 est $35.72
Main data source: CIA World Fact Book
US dollarsAll values, unless otherwise stated, are in

Overview of the steps to Starting a Business in Egypt, Arab Rep.

It requires 6 procedures, takes 7 days, and costs 6.31 % GNI per capita to start a business
in Egypt, Arab Rep..o

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:

ays) Cost to

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The economic condition in the shadow of the impact of Egyptian
. revolution

Most of Egypt’s economic activity takes place in the North Eastern Nile Delta. This area
is home to vast swathes of agricultural land, mineral deposits, factories and of course
Cairo, the capital. In the last 30 years, Egypt’s economy has been dragged into the 21st
century through various reforms. Structural reforms including fiscal and monetary policy,
privatization, business legislation and investment promotion has seen it being
transformed from the highly centralized economy inherited from Gamal Abdel Nasser to
a functional market based economy. For this at least, Mubarak is respected by his
successors who claim that they have no intention of changing his economic model.
But the market based Egyptian economy isn’t really all that market based. Cronyism was
almost a norm and corruption was a given. Allocation of state lands for private
development, concessionary loans for the ruling elite, and sweet deals on privatized state
industries for regime figures were common. To this day the Army holds what is
effectively the biggest conglomerate in the country. By some estimates, Egypt’s military
controls as much as a third of the national economy. With its staggering array of
manufacturing and service operations, the military provides everything from pest control
services to washing machines, without ever paying taxes on or disclosing revenues that
are believed to be stratospheric.
Such a ‘market based’ economy of course, is extremely harsh on the poor. They have
suffered the most because of increasing food prices and are seeing the overthrowing of
Mubarak as a sign that everything should now go their way. They are currently
demanding what are effectively state hand-outs in order for the wealth gap to be closed.
The army has promised a 15% pay hike for civil servants, but if all these demands for
hand outs are met, the economy could very well end up crippled.
Think about it like this. Egypt’s economy mainly rests on tourism, foreign investment
and exports. The protests have, for the time being at least, slowed the amount of tourists
entering the country. Banks and factories have only just opened because the people have
not been going back to work, prompting the military to launch a SMS campaign to get
people off the streets and back into their workplaces, a campaign which has largely
failed. Fears of the economy has led to large scale capital flight with foreign investors

9
removing their money and Egypt’s stock market is closed and will remain so
indefinitely. Add to this a frozen financial market, paralyzing labor strikes, rising food
prices and you have a perfect recipe for collapse.
Egypt has already lost over $15 billion in output since the start of demonstrations on
January 25, according to Foreign Ministry officials. And in the coming months, Egypt’s
ruling military council will face mounting public pressure to provide immediate relief
with subsidies and other welfare measures. The interim government has already indicated
a clear propensity for economic populism, promising to pump up government salaries by
15 percent and offering a monthly pension of LE 1500 (roughly U.S. $255) to the
families of protesters killed over the course of the uprising. Question is if they are to do
this, where will the money come from?
Admittedly Egypt’s liberalization policies have yielded mixed results. Sure, there was
growth averaging at around five percent annually, but the government’s large failure to
share this income with the people has convinced the latter that the very economic model
has failed. Mubarak’s government failed to share the wealth, and the benefits of growth
have failed to trickle down to improve the lives of the poor. This has resulted in the
growing problem of unemployment and underemployment among youth under the age of
30.
But to switch from this model and to go all out welfare state will mean a very bleak
future indeed for Egypt. That’s why the economy and political situation is balanced on a
needlepoint right now. Many analysts argue that what Egypt needs now is a new
blueprint for sustainable development, including policies to address inequality and
sweeping reforms to rejuvenate a flailing educational system. But this is easier said. If the
people’s mood bends toward mass scale populism, then it would be an easy task for a
not-so-enterprising and short-termist government to comply, seeking their temporary
support. On the other hand if the people do put trust in their new government to make the
sweeping changes necessary to eventually bring Egypt’s economy out of its very own
dark age, they will be running the real risk of it all going back to the way it has been for
the last few decades, rendering their ‘revolution’ ultimately impotent.
Mubarak after all, was only one man. Many of the people in his regime who enjoyed the
privileges of power are still up there in the Egyptian system waiting for a chance to

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slowly ease back into their former status, like sycophants of the Pharaoh seeking a new
master to latch onto. What Egypt may need then, is a complete dialysis of their whole
political system. And this is a much harder task than simply getting one man out of
office. This in fact, would require a whole new revolution.

Main competitors
There is no corporation in Egypt that produce electronic products but corporation that
make compilation and international exhibition that exhibit all the luxury products such as
. cell phone, TV, computers, laptop, MP3, radio and so forth

Turkey.2

Economy – overview

Turkey's economy is increasingly driven by its industry and service sectors, although its
traditional agriculture sector still accounts for about 30% of employment. An aggressive
privatization program has reduced state involvement in basic industry, banking, transport,
and communication, and an emerging cadre of middle-class entrepreneurs is adding a
dynamism to the economy. Turkey's traditional textiles and clothing sectors still account
for one-third of industrial employment, despite stiff competition in international markets
that resulted from the end of the global quota system. Other sectors, notably the
automotive, construction, and electronics industries, are rising in importance and have
surpassed textiles within Turkey's export mix. Oil began to flow through the Baku-
Tbilisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1
million barrels per day from the Caspian to market. Several gas pipelines also are being
planned to help move Central Asian gas to Europe via Turkey, which will help address
Turkey's dependence on energy imports over the long term. After Turkey experienced a
severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an

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IMF program. The reforms strengthened the country's economic fundamentals and
ushered in an era of strong growth - averaging more than 6% annually until 2009, when
global economic conditions and tighter fiscal policy slowed growth to 4.7%, reduced
inflation to 6.5% - a 34-year low - and cut the public sector debt-to-GPD ratio below
50%. Turkey's well-regulated financial markets and banking system weathered the global
financial crisis and GDP rebounded strongly to 7.3% in 2010, as exports returned to
normal levels following the recession. The economy, however, continues to be burdened
by a high current account deficit and remains dependent on often volatile, short-term
investment to finance its trade deficit. The stock value of FDI stood at $174 billion at
year-end 2010, but inflows have slowed considerably in light of continuing economic
turmoil in Europe, the source of much of Turkey's FDI. Further economic and judicial
reforms and prospective EU membership are expected to boost Turkey's attractiveness to
foreign investors. However, Turkey's relatively high current account deficit, uncertainty
related to policy-making, and fiscal imbalances leave the economy vulnerable to
destabilizing shifts in investor confidence .

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 : Here we will take a look at some of economic fact regard Turkey *

Economy of Turkey

Currency Turkish lira (TRY)

Fiscal year Calendar year

Trade organizations G-20 major economies, OECD, EU Customs Union, WTO, ECO, BSEC

Statistics

GDP $1,038 trillion(2010)

GDP growth 8.9% (2010)

GDP per capita $13,392 (2010)

GDP by sector agriculture: 9.4%; industry: 25.9%; services: 64.7% (2009 est.)

Inflation (CPI) 3.99% (March 2011)

Gini index 41 (2008)

Labor force 25.3 million (2009 est.) note: about 1.2 million Turks work abroad

Labor force Agriculture: 29.5%, industry: 24.7%, services: 45.8%[5] (2005)

by occupation

Unemployment 10.5% (June 2010)

Main industries textiles, food processing, autos, electronics, tourism mining (coal, chromate, copper,
boron), steel, petroleum, construction, lumber, paper

Ease of Doing Business 65th

Rank

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 External

Exports $102.2 billion (2009 est.)

Export goods apparel, foodstuffs, textiles, metal manufactures, transport equipment

Main export partners Germany 9.6%, France 6.1%, U.K. 5.8%, Italy 5.8%, Iraq 5% (2009 est.)

Imports $140.8 billion (2009 est.)

Import goods machinery, chemicals, semi-finished goods, fuels, transport equipment

Main import partners Russia 14%, Germany 10%, China 9%, U.S. 6.1%, Italy 5.4%, France 5% (2009 est.)

FDI stock $205 billion (31 December 2009 est.)

Gross external debt $274 billion (31 December 2009 est.)

Public finances

Public debt 48.5% of GDP (2009 est.)

Revenues $145.3 billion (2009)

Expenses $180.6 billion (2009)

Foreign reserves $75.3 billion (31 December 2009 est.)

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars

Overview of the steps to Starting a Business in Turkey

It requires 6 procedures, takes 6 days, and costs 17.20 % GNI per capita to start a
business in Turkey.

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15
Effect of the Global Financial Crisis in Turkey

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Like many economies, the Turkish economy has been affected by the global financial
crisis with its Finance Ministry reporting that Turkey’s budget deficit swelled to 23.2
billion Turkish liras ($15 billion) in the first half of 2009, 13 times higher than a year
earlier.

Share prices in Turkey nearly doubled over the course of 2009. According to The
Economist, in the period December 2008 – December 2009 the Turkish stock market rose
the most in the world after Argentina’s stock market.

On 8 January 2010, International credit rating agency Moody’s upgraded Turkey’s rating
with a notch.[18] The credit rating agency Fitch upgraded Turkey’s sovereign rating two
notches to BB+. Turkey is one of the few countries that upgraded it’s rating with two
notches.

The Economist points out that:

Yet in many ways Turkey has weathered the credit crunch better than other emerging
economies. Partly thanks to tough regulation, not a single Turkish bank has gone under.
That is also because, unlike many Western banks, they have few toxic assets and limited
mortgage exposure. So the government has not had to divert public money into rescuing
banks.

In 2009, the Turkish Government introduced various economic stimulus measures to

reduce the impact of the financial crisis such as temporary tax cuts on automobiles, home
appliances and housing. This resulted in the production of durable consumer goods
increasing by 7.2% but automotive production still fell.

Brazil .3

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Economy – overview

The economy of Brazil is the world's seventh largest by nominal GDP and eighth largest
by purchasing power parity. Brazil has moderately free markets and an inward-oriented
economy. Its economy is the largest in Latin American nations and the second largest in
the western hemisphere. Brazil is one of the fastest-growing major economies in the
world with an average annual GDP growth rate of over 5 percent. In Brazilian real, its
GDP was estimated at R$ 3.143 trillion in 2009. The Brazilian economy has been
predicted to become one of the five largest economies in the world in the decades to
come.

Brazil is a member of diverse economic organizations, such as Mercosul, Unasul, G8+5,

G20, WTO, and the Cairns Group. Its trade partners number in the hundreds, with 60
percent of exports mostly of manufactured or semi manufactured goods. Brazil's main
trade partners in 2008 were: Mercosul and Latin America (25.9 percent of trade), EU
(23.4 percent), Asia (18.9 percent), the United States (14.0 percent), and others (17.8
percent).

According to the World Economic Forum, Brazil was the top country in upward
evolution of competitiveness in 2009, gaining eight positions among other countries,
overcoming Russia for the first time, and partially closing the competitiveness gap with
India and China among the BRIC economies. Important steps taken since the 1990s
toward fiscal sustainability, as well as measures taken to liberalize and open the
economy, have significantly boosted the country’s competitiveness fundamentals,
providing a better environment for private-sector development.

The owner of a sophisticated technological sector, Brazil develops projects that range
from submarines to aircrafts and is involved in space research: the country possesses a
satellite launching center and was the only country in the Southern Hemisphere to
integrate the team responsible for the construction of the International Space Station
(ISS). It is also a pioneer in many fields, including ethanol production.

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Brazil, together with Mexico, has been at the forefront of the Latin American
multinationals phenomenon by which, thanks to superior technology and organization,
local companies have successfully turned global. These multinationals have made this
transition notably by investing massively abroad, in the region and beyond, and thus
realizing an increasing portion of their revenues internationally.

Brazil is also a pioneer in the fields of deep water oil research from where 73 percent of
its reserves are extracted. According to government statistics, Brazil was the first
capitalist country to bring together the ten largest car assembly companies inside its
national territory.

The annual Brazil Investment Summit takes place in São Paulo and is the largest
gathering in Brazil of international investment experts covering opportunities in
alternative vehicles, infrastructure, and advanced trading strategies.

: Here we will take a look at some of economic fact regard Egypt *

19
 Economy of Brazil

São Paulo Stock Exchange

Rank 7th (nominal) / 8th (PPP)

Currency Brazilian real (BRL, R$)

Fiscal year Calendar year

Trade Unasul, WTO, Mercosul, G-20 and others

organizations

Statistics

GDP $2.09 trillion (nominal)

$2.17 trillion (PPP)

GDP growth 7.5% (2010)

$10,471 (2010) (nominal; 55th)
GDP per capita
$11,289 (2010) (PPP; 71th)
GDP by sector agriculture: 5.5% industry: 28.7% services: 65,8% (2007)
Inflation (CPI) 4.44% (Aug 2010)
Population 15.5% (2009)
below poverty line
Gini index 49.3 (June 2009)
Labour force 103.6 million (2010 est.)
Labour force agriculture: 20%, industry: 14% and services: 66% (2003 est.)
by occupation

Unemployment 5.7% (November 2010)

Main industries airplanes, steel; iron ore, coal; machine building; armaments; textiles and apparel;
petroleum; cement; chemicals; fertilizers; consumer products, including footwear,
toys, and electronics; food processing; transportation equipment, including
automobiles, rail cars and locomotives, ships, and aircraft; electronics;
telecommunications equipment, satellites, real estate, brewing, tourism

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 Ease of Doing 127th
Business Rank

External
Exports $201.9 billion (2010 est.)
Export goods transport equipment, machinery, steel, airplanes, paper, electric machinery, iron ore,
soybeans, footwear, coffee, autos, automotive parts, machinery

Main export China 15.3%, United States 9.6%, Argentina 9.2%, Netherlands 5.1%, Germany
partners 4.0% (2010)

Imports $187.7 billion (2010 est.)

Import goods machinery, electrical and transport equipment, chemical products, oil, automotive
parts, electronics

Main import United States 15.0%, China 14.1%, Argentina 7.9%, Germany 6.9%, Japan 3.8%
partners (2010)

Gross external $310.8 billion (31 December 2010 est.)

debt

Public finances
Public debt 41.4% net debt of GDP (2010)
Revenues $354.8 billion
Expenses $434.9 billion
Credit rating BBB-
Foreign reserves $328.6 billion (December 2010)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

Overview of the steps to Starting a Business in Brazil

It requires 15 procedures, takes 120 days, and costs 7.26 % GNI per capita to start a
business in Brazil.

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Effect of the Global Financial Crisis in Brazil

After the G20 finance ministers and the World Bank/IMF annual
meetings in Washington last weekend, most Latin American ministers
of finance returned to their countries with a somber outlook. As the
global financial crisis continues to unfold, it was clear that developing
countries may have to replace some market financing with lending Brazil's President Lula
from the multilaterals, and prepare for the recession in the U.S., which da Silva speaks during
the US-Brazil CEO
will inevitably occur as a result of the credit squeeze of the past
Forum in Sao Paulo
months, and its impact on global markets.
This doom and gloom has not infected Brazil, however, where
President Luiz Inácio Lula da Silva is showing unprecedented self-assurance. Speaking in
Madrid, Lula said somewhat rhetorically that "this idea that markets can do everything is
over,” and more fundamentally “The times in which emerging countries depended on the
IMF are over.” This is not Hugo Chavez speaking, but the president of Latin America’s
largest economy, who enjoys 80 percent popularity in his country. Lula also alluded to
the fact that Basel rules have been applied to banks in Brazil but not in the U.S. “That has
to end,” he said. Since 1995, banks in Brazil have complied with an 11 percent capital

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requirement—one of the highest in Latin America—and Lula wants new regulation of
world financial markets, which would be stricter on banks from advanced countries.

Such a high level of confidence from Lula about Brazil’s economy reflects some
underlying economic fundamentals that cannot be ignored. Brazil’s foreign reserves are
now $205 billion, four times higher than in 2004. Financial intermediation, though low
for developed country standards, is conducted primarily by domestic institutions. Only 30
percent of bank assets are foreign-owned, compared to over 80 percent in Mexico. To the
extent that Brazilian banks also have very low foreign liabilities, the economy is
somewhat protected from a major credit contraction in international financial markets.

However, nearly half of Brazil’s exports are commodities, which have benefited from
historically high prices during the last four years. The world is still debating whether this
is a permanent shift in commodity prices or whether prices will go back to their long-run
levels. Demand from China, substitution of fossil fuels, and limited technological
progress in agricultural production seem to be part of the explanation for higher prices
(some economists would also add the effects of high liquidity in advanced countries).
Although no one really knows what is going to happen with commodity prices in the
future–with high food prices, research and development in agriculture is likely to surge—
the simple fact is that during the last month alone soybean prices declined 20 percent.
Prices of other commodities fell between 14 and 20 percent. This means that Brazil’s
exports may indeed take a hit in the near future.

Brazil is expected to run a current account deficit of about 2 percent of GDP for 2008 and
2009 even under optimistic scenarios for export prices. Of course, with sharper declines
in prices and lower demand abroad for its exports, the deficit could increase. Although
this does not pose a major risk, it simply suggests that Brazil is not in the group of
countries with large foreign exchange surpluses. Not surprisingly, as world financial
markets collapsed during the last month, the real lost 31 percent and stock prices declined
20 percent, while spreads on Brazilian debt rose by more than 170 basis points. Under
this new scenario, Petrobras, as well as other Brazilian flagship corporations, may have to
cut somewhat their aggressive investment plans.

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Looking at these fundamentals of the Brazilian economy, there are good reasons
therefore to believe that Brazil’s economy is resilient to the global financial crisis. But
that does not mean that Brazil is immune. As in China, the key to Brazil’s future depends
heavily on the domestic market. With a growing middle class, and large infrastructure
projects under way, private consumption and domestic investment are likely to become
the major sources of growth in the years ahead. In fact, the government is launching a re-
industrialization strategy, with high investment in steel, petrochemicals, and defense
equipment (including construction of its first atomic submarine). Is this going to revive
the white elephants of the 1960s and 70s? Probably not. This time around the
development strategy in Brazil is carried out by the private sector, with limited support
from the government, and much better governance structures than in the past. If these
fundamentals can remain strong, Brazil may yet dodge the current global economic
bullet.

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