Sony Ericsson Case Study

1068 Words 5 Pages
Joint Venture: Sony Ericsson
By: Upasana Banerjee
On October 1st 2001, Sony, a Japanese electronics company, founded in 1946, joined Swedish-born Ericsson, 70 years its senior, in holy matrimony.
Ericsson used to get chips from Philips, but in March, 2000, a fire destroyed the production facility of Philips. Facing an acute shortage of chips, Ericsson was prompted to form a joint venture with Sony.
Since joining forces, both companies have stopped producing their own mobile phones. Originally, the two companies were compatible partners for the joint venture. Sony was a major electronics brand with expertise in the industry, and Ericsson was a leading company in the communications sector.
Along with the most obvious advantages for both companies to form this alliance, Sony and Ericsson each had lesser-known reasons to enter into the venture. Both companies would benefit from each other’s established markets, making them the fifth largest mobile phone producers in the world. Also, before joining, Ericsson had a problem of manufacturing their goods cheaply, which Sony’s affiliates and manufacturers solved for them. Another advantage for Ericsson was Sony’s expertise in mobile handset technology, which was a key sector Ericsson was hoping to break into at the time. The early years of
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The two companies had concentrated their marketing and product placement towards middle-income people, which is the area of the market with the most dramatic decrease in purchasing during that time. It was not a long-term winning strategy. By focusing on the high-end alone, Sony-Ericsson was forcing telecommunication companies to view it as a source that does not have a complete line-up hence it wasn’t the first choice of the telecom companies looking for a wide range of products. That was the first problem with its

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