Mercyhurst University

Sharp Corporation

Strategic Plan and Analysis

Group 6: Brett Ball, Andrea Novoa, Kaleb Schwab, and Brianne Smail

BADM 405-02December 3, 2014

Prepared for Dr. Kris Gossett

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ContentsSharp Corporation.........................................................................................................................5

Company Description:...............................................................................................................5

About This Report:....................................................................................................................5

Section 1 – Historical Analysis......................................................................................................6

1. Historical Analysis of Sharp Corporation.......................................................................6

2. Historical Analysis of Consumer Electronics Industry................................................31

3. Historical Analysis of Key Competitors........................................................................35

Competitor #1 – LG Electronics.........................................................................................35

Competitor #2 – Panasonic Corporation...........................................................................38

Competitor #3 – Samsung Electronics...............................................................................47

Competitor #4 – Sony Corporation....................................................................................52

4. Discussion of Relevant Historical Environmental Changes in the Industry..............55

Macro-environment of the Consumer Electronics Industry...........................................55

Historical Competitive Forces of the Consumer Electronics Industry...........................57

Historical Dominant Economic Features for the Consumer Electronics Industry.......58

Works Cited – Section 1..........................................................................................................59

Section 2 – Current Analysis......................................................................................................61

Subsection #1 – Company Profile...........................................................................................61

1. Discussion of Sharp Corporation’s Current Overall Strategy................................61

2. Discussion of Sharp Corporation’s Current Competitive Advantage in the Industry................................................................................................................................63

3. Discussion of Sharp Corporation’s Current Strategy Relative to the 3 Tests of a Winning Strategy.................................................................................................................63

1. How well does the strategy fit the company’s situation?...................................63

2. Is the strategy helping the company achieve a sustainable competitive advantage?........................................................................................................................64

3. Is the strategy producing good company performance?....................................65

4. Discussion of Sharp Corporation’s Current Strategic Vision / Mission.....................65

5. Identification of Sharp’s Core / Distinctive Competencies..........................................69

6. Current SWOT Analysis.................................................................................................70

Strengths...........................................................................................................................70

Weaknesses.......................................................................................................................72

Opportunities...................................................................................................................73

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Threats..............................................................................................................................74

7. General Discussion of the Current State of the Following Components....................76

A. Finance / Accounting Analysis...................................................................................76

Balance Sheet Discussion..............................................................................................77

Income Statement Discussion........................................................................................79

Statement of Cash Flows Discussion.............................................................................81

Stock Discussion............................................................................................................82

Ratio Analysis................................................................................................................84

B. Marketing Analysis.....................................................................................................90

Products........................................................................................................................91

Promotion.....................................................................................................................98

Price............................................................................................................................102

Place............................................................................................................................104

C. Management Analysis...............................................................................................106

Subsection #2 – Industry Profile..........................................................................................111

1. Identification and Discussion of Relevant Competitors.........................................111

A. Relevant Information Regarding the Financial Position of Key Competitors111

Competitor #1: LG Electronics................................................................................111

Competitor #2: Panasonic Corporation...................................................................114

Competitor #3: Samsung Electronics.......................................................................116

Competitor #4: Sony Corporation...........................................................................119

Financial Position Comparison of Competitors Using Ratio Analysis.................121

B. Relevant Information Regarding Current Marketing Strategy of Key Competitors....................................................................................................................126

Competitor #1 - LG Electronics...............................................................................126

Competitor #2 – Panasonic Corporation.................................................................132

Competitor #3 - Samsung Electronics......................................................................135

Competitor #4 - Sony Corporation..........................................................................139

C. Relevant Information Regarding Current Corporate Structure, Leadership Transitions, or Management Team of Key Competitors...........................................144

Competitor #1 – LG Electronics...............................................................................144

Competitor #2 – Panasonic Corporation.................................................................147

Competitor #3 – Samsung Electronics.....................................................................149

Competitor #4 – Sony Corporation..........................................................................152

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2. Discussion of Relevant Economic Factors Affecting the Industry........................155

3. Dominant Economic Factors....................................................................................159

4. Identification of Key Competitive Forces in the Industry.....................................161

5. Discussion of the Current Driving Forces in the Industry.....................................165

6. Creation and Discussion of Strategic Group Map..................................................166

7. Identification and Discussion of Industry Key Success Factors............................168

Works Cited – Section 2........................................................................................................172

Strategic Plan.............................................................................................................................177

1. Discussion of Likely Strategic Maneuvers from Relevant Competitors in the Next 3 Years.......................................................................................................................................177

Competitor #1 - LG Electronics.......................................................................................177

Competitor #2 - Panasonic Corporation..........................................................................179

Competitor #3 - Samsung Electronics..............................................................................181

Competitor #4 - Sony Corporation..................................................................................184

2. Identification of Competitive 3-Year Strategy for Sharp Corporation........................187

A. Discussion of Which Generic Competitive Strategy is the Best Fit for the Next 3 Years...................................................................................................................................187

B. Identification of Offensive Strategies to Exploit Against Competitors and Which Competitors You Will Use Them On...............................................................................191

C. Identification of Defensive Strategies to Protect Competitive Advantage from Other Industry Participants and Which Participants You Should Implement Them For....194

D. Discussion of General Timeline to Implement Offensive and/or Defensive Strategies in Next 3 Years...................................................................................................................195

Year One:.......................................................................................................................195

Year Two:.......................................................................................................................195

Year Three:....................................................................................................................195

E. Discussion on Other Potential Supplemental Strategies...........................................195

3. Identification of Relevant Issues Concerning International Markets and / or International Suppliers.........................................................................................................197

4. Brief Discussion of Functional Policy to Accommodate Strategic Plan........................199

A. Discussion of Strategic Policy Relative to Finance / Accounting..............................199

B. Discussion of Strategic Policy Relative to Marketing Strategy.................................202

C. Discussion of Strategic Policy Relative to Management Strategy............................206

Works Cited - Section 3.........................................................................................................210

Contact Information..................................................................................................................211

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Sharp Corporation

“Make products that others want to imitate.”

-Tokuji Hayakawa, Sharp Founder

(58)

Company Description:

Sharp Corporation is a Japanese multinational corporation that designs and manufactures

consumer and industrial electronic products. The company was founded in September 1912 by

Tokuji Hayakawa (59). Sharp is headquartered in Osaka, Japan. As of March 2014,

approximately 50,000 people are employed with the company (59). Sharp offers a variety of

products including LCD monitors, TVs AQUOS, mobile phones and smartphones, air purifiers,

solar panels and cells, home appliances, along with many other consumer, business, and

industrial products (60).

About This Report:

This report was compiled for Dr. Gossett’s Business Policy and Strategy Class for the Fall 2014

Semester at Mercyhurst University by Brett Ball, Andrea Novoa, Kaleb Schwab, and Brianne

Smail. It is a strategic plan for Sharp Corporation containing a historical analysis, a current

analysis, an industry profile, and a three year strategy for Sharp Corporation and the consumer

electronics industry.

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Section 1 – Historical Analysis

1. Historical Analysis of Sharp Corporation

Disclaimer: Most of the information used in this section came from PDF1 which is Sharp’s

historical document directly from their website, unless otherwise noted.

Tokuji Hayakawa founded Sharp Corporation in 1912. He opened a metal working

business with two other men, a craftsmen and an apprentice (PDF1). He first started producing

the Tokubijo buckle. His second product was the adjustable-flow faucet that took one minute

installing instead of thirty minutes like the other ones (PDF1).

In 1915 writing instrumental manufactures placed a large order of metal fittings for use in

a mechanical pencil, this product was considered the predecessor of the Sharp Pencil (PDF1).

Tokuji has set a goal of improving the mechanical pencil and after working for days he was

successful, the Hayakawa Mechanical Pencil was born (PDF1). Tokuji was reunited with his

older brother, the two established Hayakawa Brothers Company (Hayakawa Keitei Shokai) they

worked together to sell the mechanical pencils. They were exporting to the United States and

Europe (PDF1).

In 1916 Tokuji developed a super-fine pencil lead and they named it Ever-Ready Sharp

Pencil (2). Then they introduced more products including more affordable models, also luxurious

products made of gold and silver, and models incorporating a watch or a lighter (PDF1).

The company established a branch factory in 1920 in Oshiage and then purchased the

land for the third factory in Kameido (PDF1). The original Sharp Pencil was exhibited at the

Peace Commemoration Tokyo Exposition in 1922, where it received a gold medal that furthered

enhanced its reputation for quality and aesthetics (PDF1). Tokuji lost everything in the Great

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Kanto Earthquake in 1924, so he relocated to Osaka for a fresh new start. He established

Hayakawa Metal Laboratories (Hayakawa Kinzoku Kougyo Kenkyusho) (2).

1925 was a big year for Tokuji. He was looking for a new business area. He started

looking into radios, in April of this year he succeeded in assembling a radio, which was the birth

of the first crystal radio produced in Japan (2). Test radio signals began being broadcast from a

station in Osaka two months after they had succeeded with the radio, the radio worked perfectly.

It was their first step to becoming an electronics manufacturer (PDF1). They set up a sales office

in Osaka and began selling their products and also imported vacuum-tube-radios and parts

(PDF1).

In 1926 they started to export radios and radio parts to China, India, Southeast Asia, and

South America. Tokuji introduced an AC-powered vacuum-tube radio in 1929, which was as

good as the imported models but cost much less (2). In 1933 they started exporting to Europe,

Australia, and Africa too (PDF1). Hayakawa Metal Industry Institute Co., Ltd. (Kabushikigaisha

Hayakawa Kinzoku Kougyo Kenkyusho) was established in 1935 and Tokuji Hayakawa was

appointed president (PDF1). The company employed 564 workers. 1936 was the year the

company changed its name to Haykawa Industrial CO., Ltd. A new plant was built in Hirano.

The company broadened its sales network in 1937 by opening branch offices in Korkura,

Nagoya, Shizuoka, Sendai, Kanazawa, Hiroshima, Okayama, Kochi, Kumamoto, and Kagoshima

(PDF1). A new intermittent belt conveyor system was introduced to the radio production line,

based on Tokuji’s own design. Year by year the production increased dramatically; from 58,000

to 88,000 units in 1938, and then to 130,000 in 1939 (PDF1).

In 1942 they changed the name again to Hayakawa Electric Co., Ltd (2).1948 was the

year the company increased its capitalization to 30 million yen. The capital increased at the end

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of the year so they began trading its share through the Osaka Securities Dealers Association

(PDF1). In 1949 the company’s stock was listed on the Osaka Securities Exchange. The selling

price for the first trade was 42 yen per share (PDF1).

The new Sharp 5R-50 Superheterodyne Radio was introduced in 1950 it was a compact,

mass-produced model (PDF1). It had enough selectivity to prevent interference among broadcast

signals. A television prototype of a console-model television was completed in 1951; it was a

success at receiving television signals (PDF1). In 1952 Tokuji visited the Radio Corporation of

America in the United States and he signed a technical assistance agreement, and it led to

Japan’s first mass produced televisions (PDF1). The government approved the alliance with

RCA and the company started working on a design for a TV. Three models were created a 12, 14

and 17-inch screen, tests results were excellent (PDF1). The Sharp TV3-14T TV was the first

domestically produced television in Japan. The company also began publishing Sharp News, an

informational magazine that served as a bridge between retailers and the company (PDF1).

In 1953 Hayakawa Electric introduces its first commercial television set under the brand

name Sharp (2). 1953 is regarded as the first year of electrical appliance era in Japan. At the

beginning of the year they only produced 15 TV sets, but then the production volume increased

they knew it would get to 1,000 TV sets per month they reduced the prices (PDF1). To increase

production, the company continued to build extensions to its plants in 1954, with TV production

capacity eventually reaching 20,000 sets per month (PDF1).

The TB-50 from 1957 had the world’s first push-button tuner. This tuner allowed users to

quickly select a station simply by pressing a button, without having to turn a channel-selector

dial (PDF1). They announced a new business policy in which they were going to expand to

become a comprehensive consumer electronics manufacturer by adding more home appliances to

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the lineup (PDF1). They started with electric fans, refrigerators, washing machines, toasters,

electric rice cooker, and air conditioners. In 1958 Sharp Electric Co and Hayakawa Electric

became inseparable; one was dedicated to manufacture and the other to sell (PDF1).

In 1959 Hayakawa Electric began research and development on solar cells, a program

that would later become one of their top earners (PDF1). Hayakawa Electric also established

quality control in their plants this year (PDF1). In addition they constructed a new plant in order

to expand their consumer electronics division (PDF1). They finished out the year coming to

dealer agreements with two Southeast Asia companies, expanding their sales network (PDF1).

In 1960 Hayakawa Electric was instrumental in issuing in the color TV era with high

quality TVs (PDF1). They also constructed their first plant in Nara, Japan (PDF1). In the same

year they established their corporate health insurance program, developing medical products of

their own, and began using IBM computers at the corporate headquarters (PDF1). Hayakawa

Electric continued work on their value chain the next year by establishing a central location for

all the research the company does helping to decrease redundant behavior therefore decreasing

operational costs (PDF1). The President received the medal from Blue Ribbon for his work in

social welfare (PDF1).

In 1962 Hayakawa Electric created their first overseas sales base in the US when they

established Sharp Electronics Corporation (SEC) and began selling commercial-use microwave

ovens (PDF1). They also showed strong signs of corporate social responsibility (CSR) when the

President donated his own funds to build a Municipal building to help the elderly and disabled

(PDF1).They continued by providing Buddhist memorial services for deceased employees

beginning this year as well (PDF1).

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In 1963 Hayakawa Electric reorganized themselves into three divisions, radio, home

appliances, and industrial equipment (PDF1). They also expanded their solar cell research this

year, placing it on a much larger scale (PDF1).

In 1964 Hayakawa Electric released the world’s first all-transistor diode electronic

desktop calculator weighing in at 55 pounds (3). Hayakawa Electric began the research and

development at this point to make it smaller and more portable (PDF1).

In 1965 Hayakawa Electric adapted silicon transistors dropping the weight of the

calculator down to 35 pounds with the new CS-20A to be released the next year (PDF1). The

president also received the Japanese Order of the Sacred Treasure, Gold Rays with Neck Tie for

his success in both business and social welfare (PDF1). This was also the year Hayakawa

Electric began its five-year plan to get its outlet stores to account for 70% of their sales; it was to

be accomplished by 1970 so it was called the “70 Strategy”. Hayakawa Electric began its

“Attack Team of Market” (ATOM) this year when their inventory was backed up due to a

downturn in the market (PDF1). Hayakawa Electric was forced to shut down production for a

while, and they sent out employees from the manufacturing and engineering departments to sell

having no previous knowledge of selling (PDF1). This would turn into a successful program

helping to boost sales (PDF1).

In 1966 Hayakawa Electric developed the CS-31A, the first calculator to use integrated

circuits as opposed to transistors (PDF1). A Japan lighthouse used Hayakawa Electric’s solar

technology to harness solar power (PDF1). They also released the first microwave oven in Japan

with a turntable (PDF1). SEC dramatically increased their profits with the help of the CS-20A

(PDF1).

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In 1967 Hayakawa Electric finished construction of a dedicated radio production facility

outside of their normal production area (PDF1). The U.S. had reached 1.28 million TVs in

production for the year compared to 5,000 in 1962 (PDF1). They released the first microwave to

emit a ding when it was done (PDF1). Hayakawa Electric held fairs showcasing their products in

major Japan city department stores for their 55th anniversary (PDF1). Hayakawa Electric made a

step toward vertical integration by buying Sharp Electric (PDF1). They also managed to be the

first major Japanese consumer electronic company to get into Okinawa, then under US rule

(PDF1). This made them a domestic company and bolstered their southern market share ahead of

the competition (PDF1).

In 1968 a large scale plant dedicated to color TV production was completed to keep up

with demand (PDF1). Sales have doubled from 1966 to 1968 (PDF1). Hayakawa Electric held

their first presentation to establish the mission and the vision to the management, this has been a

mainstay ever since (PDF1). The CS-16A was released bringing the weight down to eight

pounds and moving ever closer to the personal calculator (PDF1). Exports had become 38% of

sales (PDF1). Hayakawa Electric spent the money they would have at an expo on opening up a

new Advanced Development center meant to develop new technologies (PDF1).

In 1969, they managed to release the world’s first battery-powered electronic handheld

calculator the QT-8D, and developed a signal to aide in the adjusting of color TVs (4). They also

ran a moral image campaign after finding their image worse than what they wanted (PDF1).

They rebranded themselves as a first class business possessing superior technology (PDF1). The

president began raising funds for social welfare and to increase their corporate social

responsibility image (PDF1). Hayakawa Electric began working with LCD technology (PDF1).

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In 1970, Hayakawa Electric was less recognized than Sharp forcing a name change to

Sharp Corporation (PDF1). Sharp developed the first infrared detecting light, later to be known

as LED lights (PDF1). President Tokuji Hayakawa was named chairman and Senior Executive

Director Akira Saeki was named president (PDF1). Sharp began developing a copier (PDF1).

Sharp’s plant was independently established as Sharp Precision Machinery Co (PDF1). This year

began a lawsuit of Sharp working against anti-dumping laws that would last until 1987 when the

lawsuit was dropped for good, this cost a lot in legal fees (PDF1).

In 1971 Sharp officially completed the plan to have 70% of their sales come from their

outlet stores (PDF1). Sharp got into the cash register business this year (PDF1). Sharp

established an Australian sales base (PDF1). They were also awarded the Okochi Memorial

Production Prize for their innovation in calculators (PDF1).

In 1972 Sharp’s first copier was released and was the first copier of its kind (PDF1).

Sharp recognized LCD’s as the next big step in innovation and began research and development

(PDF1). A new sales company system was organized by consolidating 61 regional companies

into 16, in order to create a larger sales force (PDF1). Sharp Systems Products was formed from

Sharp’s computer systems marketing division (PDF1). A Product Reliability Control Center was

established to better care for the customer creating another competitive advantage for Sharp

(PDF1). Due to consumer demand they established nine Business Cooperation Centers

throughout Japan (PDF1). Hayakawa Electric established a Europe sales base in West Germany

(PDF1).

In 1973, Sharp established the Business Philosophy, Business Creed, and Basic Business

Principles that have been guiding the companies these years (PDF1). Employee savings scheme

was established along with a new manufacturing base in Korea called the Sharp Data

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Corporation (PDF1). They released a pocket-sized calculator utilizing LCD technology. Sharp

began working on ways of preventing energy waste (PDF1).

In 1974 Sharp released the HAYAC-5000 an office computer doing spreadsheets

previously only able to be done by large computers; in addition they released another smaller

calculator (5). They also combined their Refrigeration Equipment with the Air Conditioning and

vending machine divisions to create the Commercial Equipment Division (PDF1). They also

developed a thinner, power saving, higher quality than CRT screens (PDF1). Canadian and

Malaysian Branches were established along with company-wide quality standards to

accommodate the quickly expanding company (PDF1).

In 1975 the Australian branch began manufacturing and selling color TVs (PDF1). This

was also the beginning of a major shift in strategy to improve their balance sheet (PDF1). Sharp

implemented a plan to reduce debt, improve their Capital to Assets ratio, and lower their break-

even point (PDF1). This was set into motion by departments reducing their Accounts Receivable

and inventory levels (PDF1). This gave them the ability to invest more. The 9 mm calculator

came out this year (PDF1).

In 1976 Sharp released the world’s first solar powered calculator (PDF1). They also

managed to find a quick cost-effective way to put large-scale integrated circuits (LSIs) into small

calculators and make smaller lighter copiers this way (PDF1). This was a major innovation in the

calculator industry in which they were already the leader (PDF1). This forced them to build a

new manufacturing plant at the end of the year (PDF1). They began a new plan called the New

Life product strategy where they proposed a new lifestyle to the baby boomers (PDF1). They

began looking at their customers and then picking the products that suited them as opposed to

taking their products and identifying what customers could use them; this is an innovative

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strategy that works for many successful companies today (PDF1). The first products in this new

strategy were a 16 inch color TV that was as heavy as a 14 inch TV, and a refrigerator with the

refrigerator on top with a vegetable drawer that could have the temperature controlled separately

in response to housewives that wanted to keep vegetables fresh without them drying out (PDF1).

Sharp solar cells were also sent to outer space on a Japan satellite, the quality assurance had to be

outstanding because repairs were near impossible once the ship was launched (PDF1). Sharp

began research on LCD TVs this year (PDF1). This was the first year in ten straight years of

growth for the company (PDF1).

In 1977 a new committee was formed to inform all employees of the New Life strategy

(PDF1). Sharp also began creating task forces from multiple departments to deal with company-

wide issues as they arose; 14 task forces were established this year (PDF1). They also released a

calculator that took advantage of the LSI capabilities and was the first C-MOS based calculator

that included games (PDF1). Another calculator came out that got rid of buttons to be touch

screen and was 5 mm, this was effectively marketed on commercials claiming “The button war is

over” (6). Sharp’s first pocket computer came out this year when they added programming

capabilities to a calculator (PDF1). Sharp System Service was formed from the service

departments of Sharp’s Office Equipment sales offices as a dedicated centralized service office

for office equipment (PDF1). This is also the year manufacturers voluntarily agreed to limit the

export of color TVs to the U.S. (PDF1).

In 1978 Sharp came out with a 3.8 mm calculator that was manufactured through an

automated process at a low price. This calculator was introduced as a permanent exhibit in the

museum of modern art (PDF1). Sharp released their first personal computer this year as a build-

it-yourself (PDF1). They also released the first desktop computer to scan documents like it was

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taking a picture (PDF1). Sharp began a new three-year plan to quickly “Advance, Challenge, and

Expand” mostly by introducing automation to many assembly lines (PDF1). Nine equipment

sales departments were organized into two different departments, one for Eastern Japan and

another for Western Japan (PDF1). Sharp met with U.S. government officials to get approval to

have their first production base in the U.S. (PDF1).

In 1979 Sharp introduced its first electronic translation device (PDF1). Two new

departments were created, one to focus on selling medical equipment, the other in application

software development (PDF1). The first U.S. manufacturing site was built (PDF1). A Swedish

marketing and sales division was formed (PDF1).

In 1980 Sharp formulated the “New Business Style at work” campaign to pair with the

new life style strategy formed previously (PDF1). Sharp had two new products that generated

multiple new interests this year, a new VCR and a new double cassette player (PDF1). A new

plan to reach one-trillion yen in sales by 1987 was introduced (PDF1). This is the year the

founder Hayakawa passes away (PDF1). A new group was formed to commercialize solar power

(PDF1). The next generation of Sharp’s pocket computer was introduced with more

programming capabilities than the previous generation (PDF1). A fax machine was introduced

capable of sending and receiving text much more clearly (PDF1). A nationwide industrial

equipment department was formed from multiple equipment divisions (PDF1). A new computer

design program was introduced that reduced design time down to one-tenth the normal time

(PDF1). A manufacturing base was built in Malaysia (PDF1).

In 1981, Sharp developed its laser technology coming out with multiple laser technology

products such as a product that detected moving pictures as they were forced to scale back their

solar energy program because the solar energy market was declining (PDF1). They discovered a

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longer lasting laser technology that significantly extended the life of a laser to 40,000 hours

giving them a new competitive advantage (PDF1). A new electronic translator came out with

voice detection capabilities. Sharp released their high-end personal computer model this year

(PDF1). The personal computer division was placed under the Calculator division (PDF1).

Twelve companies combined to form Sharp Consumer Electronics Company this year resulting

in four companies that span Japan (PDF1). Sharp became the leader in US copiers because they

were the only one’s offering compact copiers (PDF1). Sharp finally began full-fledged marketing

in China (PDF1). Mass production began on CD players using the laser diode technology Sharp

had developed (PDF1). The anti-dumping suit was halted by a US judge (7).

In 1982 Sharp came out with their first electronic typewriter, this was meant for offices

(PDF1). They came out with a screen that could be used as both a TV and a PC screen (PDF1). A

manufacturing base was established in the Philippines (PDF1).

In 1983 Sharp’s first facility with the ability to mass produce electroluminescent screens

that were 2mm thin, ran at one fifth the power of a normal screen, and no blurring opened

(PDF1). A TV screen that uses LCD technology was created (PDF1). Sharp Engineering

Corporation was formed from 10 consolidated service companies (PDF1). The anti-dumping

case was reopened in the U.S. for only a few companies; one of those companies was Sharp (7).

In 1984 a copier small enough for personal use was released (PDF1).

In 1985 Sharp altered their “New Life” strategy to “New Life People”, changing from

focusing mostly on family to now focusing on a younger demographic with “unique personalities

and a strong sense of individualism” (PDF1). The plan to reach one million yen in sales by 1983

reached is culmination this year, two years late (PDF1). Export sales were beginning to shrink

(PDF1). Sharp began its Attack ’90 plan looking ahead to the 90’s to have management

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strengthened (PDF1). A major part of this plan was establishing a creative environment for

managers and their employees (PDF1). A 0.8 mm thick calculator was introduced (PDF1). Sharp

released their first high-speed copier (PDF1). The Fukuyama plant was established and used

robots in all of its production (PDF1). Sharp established a UK manufacturing plant (PDF1). A

marketing base was established in Malaysia (PDF1). Sharp held a technology showcase in China

to get the news of their products marketed in China (PDF1). A center to hold focus groups for

Sharp was established by the then Director Tsuji (PDF1). Sharp established a Communication

Audio Division inside their audio division in response to the telephone market opening up this

year (PDF1). Sharp showcased the first English-to-Japanese translation system for

minicomputers (PDF1). The LCD research and development paid off with a prototype 3 inch

LCD TV (PDF1). Sharp released a facsimile, a compact fax machine (PDF1). Sharp also

established their own import company (PDF1).

The start of 1986 brought about some major changes for Sharp Corporation as a whole.

On June 27, 1986, Saeki resigned as the President of the company and became a new acting

chairman (PDF1). Haruo Tsuji, previously a senior executive director, was appointed the new

President upon Saeki’s resignation (PDF1). In January, the LCD department was upgraded to the

Liquid Crystal Display Division, which indicated the company’s determination to focus

specifically on LCDs (PDF1). In October, efforts were made to revitalize the business with a

variety of 116 items companywide: such as the introduction of new products, the utilization of

parts procured from overseas, and the review of different expenses (PDF1). Throughout the year,

Sharp consolidated the separate marketing groups that existed for consumer electronics and

information equipment into one organization (PDF1). Sharp introduced a variety of products into

the market during 1986 including a desktop-size high-precision colored scanner, an answering

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machine, and the first products from the U’s series: a toaster and microwave oven (the RE-102)

and a combination microwave and refrigerator (the SJ-30R7) (PDF1). During the Japan

Electronics Show in Tokyo in 1986, Sharp Corporation exhibited a 3-inch TFT LCD television

with about 92,000 pixels (PDF1).

In January of 1987, Sharp introduced the world’s first kanji-capable electronic organizer,

which had five personal information management functions: a calendar, scheduler, memo

function, phone book, and calculator (8). The X68000 Series was introduced in March and had

natural color graphics and superb sound quality (PDF1). The company introduced the WD-540

word processor in May of 1987, which was loaded with the artificial intelligence dictionary that

was developed by Sharp (9). On June 26, Saeki retired from acting chairman and became a

corporate advisor (10). The 3C-E1 3-inch LCD color television was released in October, and an

ultra-low-power CJ-S30 cordless phone was introduced at the end of the year in December

(PDF1). After stepping in as the new President of Sharp Corporation, President Tsuji introduced

and set a company-wide slogan: “Catch the opportunity in change and create new demand. Have

a creative spirit for innovation and act upon it (PDF1).” Other important events in Sharp’s

history from 1987 that should be noted are that the company released the ES-X1 washer and

dryer that incorporated a washing machine and dryer in one unit, they developed an ultra-high-

luminance 5,000 mcd LED lamp which expanded the application of LEDs to electronic

billboards, tail lights for automobiles, and other uses, and the name ‘Sharp’ became linked with

LCD (PDF1).

April 1988 brought about the introduction of the low-power CJ-S100 cordless phone

(PDF1). As Sharp was beginning to prepare for its 80th anniversary in 1992, they implemented a

new company-wide strategy to use optoelectronics as a core technology to expand the size of the

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business and it also called for placing more emphasis on information and electronic devices, as

well as other new areas (PDF1). Two employee focused programs were started including: an

internal application program where employees could tackle areas that the company was pursuing

and a program that sent employees for a limited time inside and outside the company so that they

could gain a wider range of knowledge in the field (PDF1). During 1988, Sharp introduced the

WV-500 laptop word processor, completed the first prototype of the 14-inch color TFT LCD,

and commercialized a series of mobile information tools under the brand name of Bware

(Business Ware) (PDF1). Sharp Corporation also made it clear in their basic corporate policy

that it intended to become a comprehensive electronics company with optoelectronics as its core

technology (8).

Sharp Corporation continued their endeavors into the year 1989, when it introduced an

industry first – a refrigerator with a dual-swing door that could open to the right or left (the SJ-

38WB) (11). Another industry first was introduced in September of the same year when the

company introduced the first low-power cordless phone with an answering machine (the CJ-

A300) (12). Sharp also introduced its first full color copier (the CX-7500), the LCD projection

system which made it easy to create a 100-inch display (the XV-100Z), and the industry’s first

video camera with a color LCD viewfinder which made it possible for users to identify objects

by color (PDF1). The LCD projection system received the grand prize at the 1989 Nikkei

Outstanding Products and Services Awards (PDF1). A new personnel evaluation system was

implemented where employees had an interview with their superiors to set goals and evaluate

their performance (PDF1). In 1989, Sharp embarked on the development of a global network

linking all of its business locations around the world using dedicated telecommunications lines

(PDF1).

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The year 1990 saw the introduction of a home use fax system, (the UX-1), that could be

placed beneath a telephone in October (13). Two months later, in December, Sharp introduced a

VCR that had a vacuum deposition head and enabled users to enjoy high-quality images, even

when playing them back in extended play mode (PDF1). A new up-to-date model of Sharp’s

word processor was released in 1990, (the WD-A340), which included Super Outline Fonts that

could be printed beautifully regardless of the font sized used (PDF1). A classroom / learning

support software developed by Sharp System Products that utilized networks and supported the

creation of teaching materials was introduced in 1990, as well as the AX386LC color TFT LCD

Laptop PC (PDF1). Sharp developed an EL display capable of processing handwritten text that

users could input as if they were writing on paper (PDF1). The company also revealed a

convection microwave that it had been developing that incorporated fuzzy logic control (8).

In April of 1991, Sharp Corporation instituted a system to oversee product quality and

reliability and different environmental issues (8). The company achieved two industry firsts in

the year of 1991. The first was the introduction of a fully automatic washing machine, (the ES-

B750), which used air bubbles to clean (PDF1). The second was the first wall-mount LCD TV,

(part of the 9E-H series), which also incorporated the industry’s largest 8.6-inch TFT LCD with

437,760 pixels (8). Aside from producing industry firsts, 1991 also brought about the

introduction of the business use word processor (the WD-SD70), the release of a high-speed

copier (the SD-2075), and the introduction of a pocket cordless phone with an answering

machine function, which featured an easily portable handset (PDF1). Throughout 1991, Sharp

continued to reinforce its leadership position in the LCD field by completing a new LCD plant in

Japan, as well as a new facility for mass-producing LCD panels in the United States (PDF1).

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The global network of telecommunications lines that was started in 1989 covered sixty

two bases in thirty countries as of April 1992, which meant that these countries were able to be

globally connected to one another (PDF1). One electronic product that was debuted in October

of 1992 was the ViewCam, which had a promotional concept of “shoot, watch, and enjoy” and

ushered in a new era of video cameras (14). The year 1992 saw the release of a portable word

processor with handwritten input via a pen-stylus (the WV-S200), the release of a high definition

television with a built-in MUSE decoder (the 36C-SE1), and the release of a 16:9 widescreen,

ultra-high-resolution high definition television with 1,125 scanning lines, which was more than

twice as many as conventional televisions (PDF1). Sharp Corporation introduced a variety of

products into the market in 1992 including: a word processor that allowed handwritten editing

using a pen-stylus (the WD-A751), a fully automatic washing machine (the ES-BE65), an

electronic organizer with a pen-based operation, and the RZ-A765 for system products with a

duty color LCD (PDF1). As a corporation, Sharp celebrated its 80th anniversary and also added

six new sales organizations, which made for a total of nine subsidiaries in nine countries (PDF1).

Sharp Corporation signed a long-term business partnership with Intel Corporation of the United

States, with a major focus on research and development and the production of flash memory

(PDF1).

In 1993, Sharp Corporation debuted the world’s smallest and lightest portable MiniDisc

player of its day that took the industry by storm (15). Two different refrigerator models were

introduced and developed throughout 1993: the SJ-V45K which used a newly developed CFC-

free vacuum insulation material and the SJ-SE40R which became number one in the industry for

energy savings (PDF1). The LCD ViewCam that was introduced in 1992 grew into a flagship

product for Sharp during 1993 and showed the world that “LCD is Sharp” (PDF1). The growth

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of this product contributed to the boosting of the company image (PDF1). A new PDA, the

Zaurus, was developed and incorporated new features such as facsimile transmission, PC linking,

handwriting recognition, and multimedia (16). The Zaurus became one of Sharp’s flagship

products alongside the ViewCam (PDF1).

Sharp Corporation continued their innovative success into 1994 as they developed and

introduced more products into the industry. Sharp developed the industry’s first reflective color

TFT LCD that was easily viewable, even outdoors, and did not require a backlight in 1994 (8). A

new residential solar power system consisting of monocrystalline solar cells with high

conversion efficiency and compact power conditioner to handle the grid interconnection was

introduced (PDF1). The company also introduced an enhanced version of their digital copier, the

AR-5040, which made physical copies after first storing digital images of the originals on a built

in hard drive (PDF1). Sharp announced the development of a 21-inch TFT color LCD wall-

mount TV, which was the world’s largest up to that point in time (8). This development showed

the world Sharp’s high standard of LCD technology and broke the 20-inch barrier in the industry

(PDF1). Aside from introducing and developing new products in 1994, Sharp was also in the

process of expanding their production facilities. The company established a new plant in

Indonesia for the production of color televisions and refrigerators (PDF1). A new production line

was also started in August of 1994 that would produce four 104-inch LCDs from a second

generation glass substrate (PDF1).

Sharp Laboratories of America, Inc. was established in 1995, which continued the

expansion of the company (17). This facility, located in Washington State, was founded so that

researchers in America could use rapidly advancing multimedia technology to create original

products for the company (17). The year 1995 also brought about the introduction and launches

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of more new products from Sharp Corporation. The Mebius notebook PC, (the AV1/50CD), was

launched as a core Pi2T product (PDF1). Sharp introduced products including an updated version

of the digital copier originally introduced in 1994 that included facsimile functions (the AR-

5030FR) and the RZ-A505 for system products with an 8-inch color TFT CLD display (PDF1).

A Window series of LCD televisions that included the 10.4-inch LC-104TV1 model was also

introduced in 1995, which was promoted as a line of personal televisions that could be set up

almost anywhere (PDF1). The company announced their development of a 28-inch LCD using

next-generation LCD technology (PDF1).

In May of 1996, Sharp Corporation was among the first companies to establish an online

presence in the early days of the commercial Internet (17). Websites were created in Japanese

and English in order to provide company information and new product news to the public (8). A

new air conditioner was introduced in October that featured conventional dehumidifying,

heating, and cooling functions but also featured a ventilation function and a humidifying function

that did not require a water supply (PDF1). This air conditioning model was an industry first.

The MR-1 was introduced in 1996, which included different functionalities, such as internet

access and PC communication (PDF1). A colored version of the Zaurus PDA was released (8).

Sharp Corporation’s innovation and different products won them awards and got the company

recognized globally. The colored version of the Zaurus PDA won numerous awards throughout

Japan and the United States of America (8). Japan’s leading economic daily newspaper chose

Sharp Corporation as the second best domestic company, out of 1,054 companies, for fiscal year

1995 (8). The newspaper rated Sharp highly for the development of key devices and original

products with unique features such as the company’s LCDs, its constant effort of developing and

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releasing demand-creating products, and increased sales and profitability for four continuous

years (8).

October of 1997 brought about Sharp Corporation’s effort to promote environmentally

sustainable management by establishing the Environmental Protection Group (8). The

Environmental Protection Group promotes a 3G1R strategy company-wide: Green products,

Green factories, Green mind, and Recycling business (8). Sharp aimed to become the number

one environmentally responsible company in the industry with respect to all aspects of the

company (8). Sharp launched a website that was specifically designed and catered towards

material procurement (PDF1). The company began satellite based digital communications

service in 1997 (PDF1). The Sharp Middle East Free Zone was established which managed the

markets of the Middle East, Africa, and Central Asia and worked to expand sales throughout the

entire region (PDF1). Sharp Corporation announced success in the development of a 42-inch

plasma addressed liquid crystal (PALC) display to drive LCDs, but ultimately ended up shelving

the product for certain reasons (PDF1). Although this product was shelved after development, it

still proved that large screen could be done which was a huge step for Sharp Corporation in the

industry (PDF1).

On June 26th of 1998 brought about changes for the leadership of Sharp Corporation.

Corporate Senior Executive Director Katsuhiko Machida was named the new Sharp President,

while President Haruo Tsuji became a corporate advisor for the company (17). Corporate advisor

Saeki became a corporate senior advisor for Sharp on this day as well (PDF1). In August of

1998, the new president declared that all televisions sold in the Japanese domestic market would

be replaced with LCD televisions by the year 2005 (17). With this decision, President Machida

chose the LCD business as Sharp Corporation’s focus (PDF1). A decision to streamline

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operations and strengthen the frontline of sales in October of 1998, meant that Sharp’s sales

companies for home appliances and information products were to merge into one segment

(PDF1). Company changes were not the only thing to occur in 1998; new products were also

developed and introduced to the marketplace. Sharp developed the world’s first System LCD

(PDF1). The company also succeeded in becoming the first company in the world to create a

stacked CSP for mobile devices that layered two LSIs to fit into a smaller package, which in turn

enabled the creation of smaller devices (PDF1). The J-SH01 mobile phone was developed, which

could display text messages that were eight characters by six lines long (PDF1). This model

became very popular and was the key to success for Sharp into getting in the mobile phone

business (PDF1). Sharp introduced an easily portable B file size notebook PC, the Mebius PC-

PJ1 (PDF1). A new series of Sharp’s multifunctional printers were developed in 1998 – a 3-in-1

unit which combined copier, fax, and printer functions into one (PDF1).

The Crystal-Clear Company Declaration was made in January of 1999 by Sharp’s

management, which called for the company to become the only company of its kind that shined

with unique technologies like LCDs (PDF1). Sharp Corporation announced the world’s first 20-

inch LCD televisions in February of 1999 and began sales immediately in March (8). The

world’s first Internet-capable microwave oven was released during this year, which let users

download recipes from the Internet that included automatic heating instructions (8). Building off

of the environmental program that was started a few years earlier, Sharp took measures to reduce

waste and greenhouse gas emissions and established Green Factory Guidelines (PDF1). The

company also felt that it was important for stakeholders to know what environmental policies the

company was enacting. Sharp Corporation began publishing the Sharp Environmental Report,

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which disclosed environment-related information and enhanced communication with its

stakeholders (PDF1).

From January 1st through January 4th of 2000, Sharp Corporation ran a massive

commercial campaign on TV to advertise and promote their LCD televisions and the LCD

business (PDF1). The company released the FU-L40X PC1 air purifier in October (PDF1). This

air purifier used the world’s first Plasmacluster ion air purification technology, which emits

positive and negative ions into the air, in turn deactivating impurities (8). This air purification

technology was also developed by Sharp (8). The J-SH04 was introduced to the market in

November of 2000, which was the industry’s first mobile phone that was equipped with a camera

(18). This phone also enabled users to send and receive photos as email attachments (18). The

next version of the mobile phone, the J-SH05, was introduced the following month in December

(PDF1). This version of the mobile phone was a flip-type phone with a TFT LCD that could

display 65,536 colors (PDF1).

Sharp Corporation introduced a variety of new products into their LCD television market

in January of 2001 including the 20-inch LC-20C1, the 15-inch LC-15C1, and the 13-inch LC-

13C1 (19). The company’s LCD televisions took on the nickname AQUOS, also in January

2001, which combined “aqua” (water) and “quality” to express the image of liquid crystals

(PDF1). The debut of AQUOS occurred in August 2001 at IFA, Europe’s largest exhibition of

AV and multimedia products (PDF1). The next model of Sharp’s mobile phone, (the J-SH07),

was introduced in June, which was a flip-type mobile phone that was equipped with a camera

and TFT LCD (PDF1). Sharp Corporation used the PC1 generators that it developed in air

conditioners, clothes dryers / dehumidifiers, refrigerators, humidifiers, and humidifying ceramic

fan heaters (PDF1).

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In 2002 marked Sharp Corporation’s 90th anniversary (PDF1). July of 2002 brought about

the development of the groundbreaking 3D LCD that did not require special glasses to be worn

by the viewer (PDF1). The same technology was used for the SH251iS mobile phone from NTT

DoCoMo and for the Sharp PC-RD3D notebook PC (PDF1). A company-wide campaign was

launched in 2002 called the ‘Be Sharp Initiative’, which aimed at improving the company’s

brand power (PDF1). Management wanted to build a stronger brand by creating a new vision and

developing products that reflected such a vision (PDF1). In November of the same year, Sharp

commissioned Hittsubashi University’s Professor Kunio Ito, (who helped develop a method to

measure the value of branding), to assist and promote branding activities for the company

(PDF1). Sharp Corporation introduced the 37-inch LC-37BD5 into the market, which

incorporated the HDTV LCD panel and also utilized quick shoot technology that ensured clear

images (PDF1).

In April of 2003, Sharp Corporation instituted the Sharp Charter of Conduct, which

placed an emphasis on the importance of observing regulations and respecting corporate ethics

(PDF1). Sharp shifted to high-resolution LCDs in 2003 for mobile devices and began a full-scale

production of System LCDs (PDF1). The company began their solar production in the United

States at Sharp Manufacturing Company of America in Memphis Tennessee, which produces a

variety of modules for commercial and residential solar installations (8). Sharp developed and

implemented a technology that enabled the repeated recycling and reuse of waste plastic as

material for use in new products such as in air conditioners, television sets, refrigerators, and

washing machines (8). This technology used by Sharp Corporation in 2003 was an industry first

(8).

Tokuji Hayakawa phrased the embodiment of the company in a single slogan “make

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products that others want to imitate” (8). Sharp has been a leader in technology with new

innovations for electronics, appliances, industrial equipment, and office use. Since Sharp’s

expansion out of Japan in 1962, the company has prospered in the United States for the past 50

years. The era of Internet reliance from the past two decades has helped Sharp make a more

definitive presence in the technology world. “From the first solar-powered calculator to the

largest commercially available LCD monitor, from copiers to solar cells, from air purifiers to

steam ovens, and from microelectronics to microwave ovens, Sharp covers all of the needs of the

contemporary lifestyle” (8).

Within the last decade Sharp pioneered several new products such as the state-of-the-art

Kameyama Plant in 2004. The Kameyama Plant created and incorporated the manufacturing of

TVs and introduced popular high-quality LCD TVs that came to be known as “Kameyama

models” (PDF1). This plant helped establish the concept of environmental technology to the

company that became critical for their growth. The Kameyama Plant was also Sharp’s first

Super Green Factory and promoted environmentally friendly production through reduced CO2

emissions and 100% recycling of wastewater. The facility was built to withstand natural hazards

including earthquakes. From this development, Sharp began to expand to energy-creating solar

cells and energy-saving LCD TVs. Sharp has also developed Illuminating Solar Panels that

utilize high-luminance LEDs (light-emitting diodes) with transparent, high-conversion-efficiency

thin-film solar cells. These solar panels allow light to pass through them and can provide

illumination in the evening due to the implanted LEDs. Additionally in 2004 Sharp integrated a

Superheated Steam Oven. This innovative appliance promotes greater health with technology

“that achieves low-calorie, low-salt cooking using superheated steam at about 300°C.  The

process enjoys three major features—reduced fat, lower salt, and preservation of vitamin C in

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foods” (8). Sharp continuously reached to be a company with zero global warming impact. They

desire to balance the greenhouse gases emitted from production through distribution of energy-

saving and energy-creating products. In 2004, Sharp rapidly expanded business in overseas

markets such as China. Through the year, Sharp established the SHINE (Sharp International

New Experience) program. This provided an opportunity for a training system allowing young

employees to earn work experience and learn a language abroad.

Sharp became a leader for solar cell production and environmental companies and in

2005 they introduced a 65V-inch Digital Full-HD LCD TV, which was the largest in the world at

the time. Continuing their leading steps towards environmental friendliness they installed a 4.5

kW Sharp solar system in Major League Baseball’s San Francisco Giants’ AT&T Park. “The

system generates 120 kW of clean electricity that is fed back into the grid serving PG&E's

customers throughout northern and central California” (8). Also in San Francisco, they built a

904 kW Sharp solar system at FedEx’s hub at Oakland International Airport. This provides

around 80% of the electricity that the system needs.

LCD panels are a large part of Sharp Corporation and therefore they created a system that

stabilizes a system to ensure a dependable supply. They adopted “eighth-generation glass

substrates (2,160 x 2,460 mm), a world first, and sets up a global five-base production system

with the goal of producing products in the region in which they are used” (PDF1). Also in 2006,

the Japanese Environment Association awarded Sharp with the Eco Mark, which is a Type I

environmental labeling. After this recognition Sharp developed samples of laser diode that can

reach a 10,000-hour service life. At the time this was the longest in the industry and only used

168mW of power. “This diode is ideal for playback of next-generation DVDs, such as Blu-ray

Discs and HD-DVD” (PDF1).

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At the 2007 Consumer Electronics Show in Las Vegas, Nevada Sharp presented a 108V-

inch LCD TV that was created at the Kameyama Plant made from the first eighth-generation

glass substrates. During this year, Sharp continued to produce various LCD technologies. The

Mobile Advanced Super View LCD and System LCD technology with embedded optical

sensors; these feature touch-screen and scanning capabilities (PDF1). Sharp establishes its solar

system on the Google headquarters in California. It was the largest commercial solar installation

at the time. “In addition to roof-mounted arrays, the system also features a new structure that

encompasses two carports under which employees can park – and if they drive a plug-in hybrid -

recharge their car” (PDF1).

In 2008, Sharp continues their development with LCD TVs and released the Next-

Generation X Series AQUOS® LCD TVs. This product shows off their Mega Advanced Super

View LCD, which incorporates superb picture quality, a thin-profile design, and exemplary

environmental performance. Sharp uses 1-Bit digital amp for optimal sound quality. Sharp’s

growth lead to a joint venture with Italy’s largest power company Enel SpA (Enel). They agreed

to operate as an independent power producer (IPP). The agreement leads to the development of a

number of solar power plants with a total capacity of 189 MW by the end of 2012 (PDF1).

Another accomplishment that they achieved in 2008 was to produce the one millionth solar

module at Memphis factory and grow production capacity at Sharp Manufacturing Company of

America (SMCA) to 100 MW.

By 2009, Sharp revealed the DL-L60AV LED lamp. It features a remote controller for

changing the color of the light; this is also an industry first. “Users could select their preferred

shade of white according to the weather, season of the year, or time of day.For example, warm

white during the winter or at dinnertime when a relaxing atmosphere is desired, or a crisp cooler

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daylight white during the summer or in the morning for a refreshing wake-up” (20). Sharp

pushed its aim to become an eco-positive company in 2009. They had accomplished an

environmental vision of energy creating and saving products to balance greenhouse gas

emissions. They set goals for 2012 to have reduced greenhouse gas emissions by more than

double. “In fiscal 2007, Sharp captured a dominant 43.9% share of the LCD TV market in Japan

(based on Sharp research). Sales of AQUOS LCD TVs in particular received a further fillip in

2009, when the Japanese government enacted its Eco-Point program. This economic stimulus

package used a system of incentives to encourage citizens to purchase energy-saving and eco-

friendly home appliances such as air conditioners, refrigerators, and TVs compatible with digital

broadcasting” (PDF1).

In 2010, Sharp implemented its Eco-Positive Vision to the corporate level and defined the

image that they would work to achieve. Sharp released new LCD TVs that utilized four-

primary-color 3D LCDs, an industry first. This was based on their UV2A technology, adding

yellow to the three red, green, blue, primary colors. This was introduced as LV Series AQUOS

Quattron 3D LCD TVs (20).

2. Historical Analysis of Consumer Electronics Industry

Sharp Corporation is part of the Consumer Electronics industry. Consumer electronics is

based on electronic devices used most often for communication, entertainment, home and office.

Sales of electronic products in the United States grew from some $200 million in 1927 to over $2

billion in 2000. The new U.S. Consumer Electronics Sales and Forecasts report projected that

total industry revenue will reach a record $211.3 billion in 2014; a steady, two percent increase

from $207 billion in sales in 2013 (35).

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Best Buy is the largest consumer electronics retailer in the world; selling a variety of

brands of electronic devices such as cameras, mobile phones, computers, televisions, appliances,

video games etc. also repairing and installing the devices. Richard Schulze founded Best Buy in

1966. Best Buy has more than 1,400 stores and locations, employs around 140,000 and earns

more than 40 billion dollars in revenue (21). They have around 1,100 stores in the United States,

and around 490 international Best Buy stores (22). Best buy acquired Carphone Warehouse and

The Phone House, which are two European retail store chains focused on mobile phones and

accessories (22). After that they operate about 2,390 mobile stores in Europe and 305 mobile

stores in the United States (22). Circuit City was the only significant direct competitor to Best

Buy, since they went bankrupt, this stimulated competition among big retail chains including

Walmart, Costco, and Amazon. Best Buy is concentrating on advancing its marketing strategy to

“more targeted, personalized and relevant customer communication, including the shift away

from traditional TV advertising to more relevant digital marketing” (22). Best Buy wants to

accelerate the growth of their online segment by making this their main focus and update its

website to get on par with Amazon and other competitors (23). They are aiming to reduce its cost

of goods sold by increasing its supply chain efficiency and modifying its return and replacement

policy (23).

Amazon is one of the biggest Internet based companies in the world based on revenue

and number of employees. This company industry is Internet and catalog retail, but being part in

one of the biggest retailers in consumer electronics. Amazon is a strong competitor of Best Buy

as mentioned before. Jeffrey Bezos founded Amazon in 1994 in the United States; employing

around 117,300 people and having sales of 74.45 billion dollars (24). The company operates in

two principle segments: North America and International (24). The North American segment

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consists of retail sales of consumer products and subscriptions through North American-focused

websites (24). The international segment consists of retail sales of consumer products and

subscriptions through internationally focused locations (24).

Walmart is another big retail store for consumer electronics. Sam Walton was the founder

of Walmart in 1962. Each week more than 245 million customers visit their 11,000 stores in 27

countries, having 473 million dollars in sales. Walmart employs around 2.2 million people (25).

Walmart’s strategy is to offer the best prices, being lower than any other retailer “the big box

retailer has started offering a number of large discounts on consumer electronics, and the

company’s executives are hoping that the price cuts will help drive stronger sales, ultimately

resulting in more encouraging earnings” (26).

There have been many big and important creations in the consumer electronic industry

through the years. Some of the biggest inventions have been the telephone, radio, mobile phone,

computers and others. The telephone was one the biggest inventions. Alexander Graham Bell

was the inventor of the telephone in 1876, he was granted the first official patent for his

telephone. Bell had the idea in 1874 as he explained that his thoughts were “If I could make a

current of electricity vary in intensity precisely as the air varies in density during the production

of sound, I should be able to transmit speech telegraphically” (27).

The invention of the radio was one of the big inventions of this industry. It all started

with the German physicist Henry Hertz when he discovered the radio waves and also gave the

methods to transmit and detect them (29). Then Guglielmo Marconi developed, demonstrated

and marketed the first successful long-distance wireless telegraph and in 1901 broadcast the first

transatlantic radio signal (28). His company’s Marconi radios ended the isolation of ocean travel

34 | S h a r p

and saved hundreds of lives, including the passengers who survived from the sinking Titanic

(28).

The invention of the television was another big one in the consumer electronics industry.

In 1884 Paul Gottlieb Nipkow patented the first mechanical television, which included a

scanning disk and a spinning disk (30). In 1926 John Logee Baird transmitted monochromatic

images, by doing that he created the first true television that could transmit silhouettes and

monochromatic images (30). In 1927 Philo Farnsworth transmitted an image through the

electronic means of a device called an “image dissector”, this was the first all-electronic

television (31). In 1936 BBC transmitted the first public TV broadcast; it claims to be the

birthplace of TV broadcasting (30). Robert Adler was the inventor of the TV remote control in

1956 (30). In 1962 AT&T launched the first television satellite, people could watch the same

channel even if they are 1 million kilometers apart, this was one of the events that started the

Modern Television Era (30). The introduction of General Electric's compact and

lightweight Porta-Color set in 1966 made watching color television a more flexible and

convenient proposition. In 1972, sales of color sets finally surpassed sales of black-and-white

sets (30).

The mobile phone was a huge change to the world and the consumer electronics industry.

In 1973 Martin Cooper and his team at Motorola developed the mobile phone, which was the

size of a brick, that would not be sold commercially sold for another decade (32). In 1989 the flip

phone was introduced, Motorola came out with a new design where the mouthpiece flipped over

the keyboard. In 1993 developers in Europe came up with a way to send written messages over

the mobile phone (32). The first smartphone is invented which could send and receive emails in

2002; also a company called Sanyo invented a phone that could take pictures. In 2007 Apple

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released their IPhone that changed the cellular industry, since it featured a touchscreen and

allowed users to do almost anything they could do from a home computer (33). Now there are

many companies who have many different types of mobile phones.

Computer was another of the big inventions in the Consumer Electronics industry. The

first and most famous computer was the Electronic Numerical Integrator Analyzer and Computer

(ENIAC) was built by the University of Pennsylvania to do ballistics calculations for the US

military during World War II (34). In 1974 a company called Micro Instrumentation and

Telemetry Systems (MITS) a computer kit called the Altair (34). Years after Steve Jobs and

Stephen Wozniak built a homemade computer that would change the world the Apple I, it was

more sophisticated than the Altair; it had more memory, cheaper microprocessor and a monitor

with a screen (34). After that they made the Apple II that had a keyboard and color screen (34).

As time passed they kept improving the computers and now there are many companies who

make computers.

3. Historical Analysis of Key Competitors

Competitor #1 – LG Electronics

LG Electronics was established in 1958, and was known as GoldStar was born as Koo In-

Hwoi saw the possibility of a new business in the electronics industry (PDF5, p.12-24). In 1959

before the inauguration of the company GoldStar’s design laboratory had already started

designing the new radio model (PDF5, p.12-24). In November the first domestic radio A-501

was designed. In 1960 they developed its second radio T-701 which was beyond the vacuum

tube, using new technologies, but it was a disaster since the market demand was very limited, it

put the company’s existence at stake (PDF5, p.12-24). They had to consider whether or not to

keep the company in 1961. They found a way to enter the market since 5.16 military government

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announced its decision to supply radios to rural and farming areas. Sales of radio rose to 1

million (PDF5, p.12-24). The company was recording 1,034,00 in 1962 in sales (PDF5, p.12-24).

Also this year was the first domestic radio exports.

In 1964 Korea’s first electronic appliances were monochrome TVs, air conditioners,

refrigerator, and others (PDF5, p.12-24). GoldStar introduced Korea’s first television in 1966

(PDF5, p.12-24). The Korean electronic industry was taken to another level. The year 1968 was

when the first air conditioner came out of the assembly line (PDF5, p.12-24). In 1969 the first

washin machine nicknamed White Swan was created; this was an event, which impacted Korean

housewives lifestyle (PDF5, p.12-24). GoldStar declared its Communication division an

independent business and established the GoldStar Communications subsidiary, also the Wiring

division was separated from the company to establish the GoldStar Cables subsidiary (PDF5,

p.12-24).

LG introduced the first cassette recorder in the market in 1973. They developed a variety

of models including one that combined radio, television and a cassette tape recorder (PDF5,

p.12-24). GoldStar was the first to establish a central research laboratory in 1975 that was

dedicated to technology enhancements (PDF5, p.12-24). In 1976 they developed their first color

TV. The company established Korea’s first overseas local production subsidiary GoldStar

America, Inc in 1980 (PDF5, p.12-24).

In 1991 the company further expanded its industrial design contest global-wide,

contributing to the growth of the international design industry (PDF5, p.12-24). In 1994 GoldStar

officially announced the merge and acquisition of the GoldStar Communications as part of the

company’s comprehensive management plan toward the 21st century. In 1995 they renamed the

company to LG Electronics (PDF5, p.12-24). Korea initiated the world’s first CDMA platform-

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based digital mobile service in 1996 (PDF5, p.12-24). LG Electronics entered the CDMA market

with its new LDP-200 mobile phone. LG developed Korea’s first 40-inch plasma display panel

in 1997, showing their advanced digital technology (PDF5, p.12-24). In 1998 LG Electronics

developed and unveiled the world's first clutch less Turbo drum washing machine targeting the

worldwide market (37). LG Electronics and Philips joined to launch their joint venture in 1999

(37). With that LG Electronics was able to reinforce its financial structure and secure resources

to invest on businesses. In the year 2000 LG Launched the world's first Internet refrigerator

Exports synchronous IMT-2000 to Marconi Wireless of Italy (37). Also having the products

exported to Verizon Wireless in U.S. In 2001 GSM mobile handset Exports to Russia, Italy, and

Indonesia, they alsoestablished market leadership in Australian CDMA market (37). Also that

year LGlaunched the world's first Internet washing machine, air conditioner, and microwave

oven (37). In 2002 LG Holding Company system separates into LG Electronics and LG

Corporation (37). The year 2003 was a big year they achieved monthly exports volume above 2.5

million units (37). They were the top global CDMA producer (37). The year 2004 was a big year

for LG; they commercialized the world’s first 55 inch all-in-one LCD TV and also

commercialized world’s first 71 inch plasma TV (37). They also developed the world’s first

satellite and terrestrial-DMB handsets. In 2005 they became the fourth largest supplier in the

mobile handsets market worldwide (37). In 2006 the first model in LG’s Black Label series of

premium handsets sells 7.5 million units worldwide (37). From 2000 to 2007 they were the

world’s largest air conditioning unit manufacturer (PDF5, p.12-24).

They posted the number one spot in U.S. frontloading washers in five consecutive

quarters in 2008 (37). Also they unveiled the world’s first Bluetooth headset combined mobile

phone and also the first Blue-ray network storage (37). They recovered over one hundred million

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units of LG air conditioners in accumulated sales (37). The year 2009 was a great year for them

as they became the second largest LCD TV provider worldwide and the third largest supplier of

mobile handsets market worldwide (37). They also became Global Partner and Technology

Partner of Formula One (37). In 2010 they unveiled the world’s first and fastest dual-core

smartphone and they also unveiled the world’s first full LED 3D TV, entering the smartphone

market (37). In July 2010, LG Group was ranked 67th in the Fortune 500 list of largest

companies with revenue exceeding $100.5 billion, operations in over 60 countries, and

employing approximately 186,000 worldwide (37). In 2011 LG introduced Cinema 3D Smart TV

combining industry-leading 3D technology and smart TV capabilities. (37)

Competitor #2 – Panasonic Corporation

Note: Panasonic from 1918-2000 is from Panasonic’s website unless otherwise noted. (38)

Panasonic was founded in 1918 by Konosuke Matsushita with three employees in a small

two story building in Japan. The initial idea by Matsushita was to tap into the untapped market of

high quality household electrical fixtures. These were of higher quality and cheaper than any

competitor offered. In February 1920 Matsushita had a company trademark of an M overlaid

with an arrow and surrounded by a wide diamond. It was meant to symbolize reaching a target

and driving through all obstacles in the way. One such obstacle was keeping up with demand.

This was overcome in 1922 when the company leased a site nearby their two-story building to

work as a factory and office. This resulted in more than 50 employees working for the company

by year end.

Around this time Matsushita developed a bullet-shaped bicycle lamp, called Excel, which

soon became a major product for Panasonic. The Earthquake near Tokyo in 1923 demolished

their sales network, but in 1924 Tokyo established a new office rebuilding the sales network.

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Shortly after that Matsushita signed a three-year exclusive sales agreement with Yamamoto

Trading Company for their Excels. This deal had tension as Yamamoto rejected Matsushita’s

attempt to guide the marketing of Excel. A new square-shaped battery lamp was developed, later

called the National, by Matsushita during this agreement with Yamamoto. He had to fight with

Yamamoto for the rights to marketing this new product, and ended up paying ten thousand yen to

market his own product. The product began marketing in April 1927 and was a massive success

selling 30,000 units a month in their first year.

These early successes were accomplished by risky campaigns from Matsushita in which

he put the company’s future at risk by providing free initial orders to stores to prove the product

would work. In 1927 the company began moving into products that produced heat through

electricity. They hired Tetsjiro Nakao as head or their research and development division, he

would stay until his death in 1981. Nakao is largely responsible for turning Panasonic into a high

quality technology company. In 1929 the company was renamed to Matsushita Electric

Manufacturing Works. This was followed by the stock market crashing which created an excess

amount of unsold stock. Matsushita halved production and did not lay off a single employee.

After two months the excess inventory was gone and demand had recovered.

In 1930 Panasonic began working in a joint venture to manufacture quality radios, which

by 1931 Matsushita himself took over the partnership and instructed Nakao to develop a higher

quality radio. The product was made and was recognized as one of the best radios of the time. In

1932 Matsushita announced a new mission to help overcome poverty that would take 250 years

to complete. The mission would consist of ten 25 year periods in which it would start with a ten-

year “construction” phase followed by a ten year “fully active” phase, finishing with a five year

“fulfillment” phase. They also began exporting this year. In July of 1933 Matsushita moved the

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Head office and factory complex to a new 70,000m2 facility in northeast of Osaka to

accommodate the growing demand for their products. Matsushita devised a system to

autonomously manage corporate divisions that was innovative for the time.

By 1935 the company employed 3,500 people, and twelve million yen in revenue. In

1938 the company began importing. When the Pacific war broke out in 1941 the company had

continual issues getting commercial products. In 1943 the company began building ships and

airplanes for the military effort. This was conducted by orders from Japan, and would cost the

company greatly after the war. In 1945 after the bombs dropped the employee roll dropped to

4,400 from 26,000. Panasonic lost 32 factory and office facilities in Japan. Overseas factories

and sales outlets were confiscated. However, the head office and main factories were still

standing and under Matsushita’s control. The company was forced to rebuild.

In 1946 the Allied Powers were forcing Matsushita to step down because of his help with

the war efforts. However, in 1947 the Allied Powers reversed their decisions when the

company’s labor union declared that Matsushita was a mainstay and that his loss would mean the

destruction of the company. This was contrary to what most labor unions in Japanese companies

believed of their management. In addition to the fight to keep their management, the company

also had to fight to get help with recovery. From 1945 to 1950 Panasonic was classified as a

family-controlled industrial and financial combine, which would get no relief from its huge

wartime debts. This designation was supposed to be in place to break up businesses with power

that had been around for generations. In 1950 the designation was lifted.

After these issues Panasonic laid off 567 of its 4,438 employees; one of the few layoffs in

the company’s history. Then in 1951, Matsushita announced his plans for reconstruction as

global instead of just focusing nationally. He then went on a three month tour of the US getting

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to understand the world’s most successful economy. He identified he needed a technical partner

in the US. This partner he determined was Philips. This partnership led to the establishment of

Matsushita Electronics Corporation in 1952 and a factory in Takatsuki, Japan. The company

began production of washing machines in 1951. Research and development of TV technology

was restarted in 1950, they were on the market by 1952. In 1953 the company began selling

refrigerators and built a new laboratory to conduct new research on modern products. In 1956

Matsushita announced a bold five year plan to quadruple annual sales to eighty billion yen and

increase employees from 11,000 to 18,000. This was achieved in four years.

In January 1961 Matsushita announced his resignation as president and took a lesser role

as a chairman handing control to family member Masaharu Matsushita. Then the company began

providing technical assistance to companies that needed it to combat poverty as the founder

continually brought up as part of the mission. In 1965 the new President Matsushita developed a

plan that was accepted within the company for a new national sales network. This began with a

nationwide reorganization of the sales company network, initiating direct transaction and

bypassing sales offices, and creating a new credit sales system. In addition Panasonic became

Japan’s first major manufacturer to introduce a five day work week. The Panasonic’s sales

department began to feel a push for sales companies to find what the customer wanted; this lead

to a succession of hit products and rapid expansion such as console stereos, an automatic

washing machine, and a console TV in 1965. In 1967 President Matsushita announced the

company’s first management slogan that contained three goals; “promote management to make

the company outstanding in world-class terms, to make creative efforts to double productivity,

and to develop innovative new products based on cutting-edge technology” (39). The next year

was the 50th anniversary in which Panasonic grew in sales 34.5%. This was partially due to the

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multiple technology exhibitions they attended and would continue to attend in the coming years

that have helped enhance public awareness of Panasonic as a high-technology company.

In 1970 Panasonic held an Expo that resulted in a time capsule visited by seventy-six

million people and containing 2,098 objects representative of the current culture for people living

5,000 years in the future. In 1971 in an effort to become more globalized Panasonic registered to

trade its share on the New York Stock Exchange. In 1973 Chairman Matsushita retired and left

Arataro Takahashi as the new chairman. The company made donations to social welfare projects

totaling five billion yen in Japan to commemorate the event. Then in 1977 President Masaharu

Matsushita replaced Takahashi as chairman, and Toshihiko Yamashita became the new

president. Yamashita began immediately recovering profitability and maintaining profit margins.

Yamashita stayed and was instrumental in developing a VHS department, but by 1986 resigned

to a senior adviser position letting Akio Tanii become the President while Japan was in a

recession.

In 1987 Tanii began pushing for better product design that responded to human need

combined with advanced technologies. This was also the year they adopted a unified accounting

year for the Panasonic group. Tanii also signed the first agreement with China in the post-war

period in which they would create picture tubes for color TVs. On April 27, 1989 the company

founder Konosuke Matsushita died at the age of 94. MCA was bought by the Panasonic Group in

1990 to work together on new electronic entertainment technologies in both hardware and

software. Panasonic had the audio and video technology, and MCA had the software resources

that could be combined to create better profitability. In 1991 Panasonic adopted the

“Environmental Charter” that says to adopt the latest environmentally-friendly technologies and

processes. All of Panasonics operating units are responsible for following this charter. In 1993

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Tanii stepped down and Yoichi Morishita was appointed President. This same year Philips was

bought out of their agreement by Panasonic ending a 40 year partnership. In 1996 Panasonic

released the lightest mobile phone yet; venturing into the expanding cell phone market. In 1998

Panasonic got an early lead on the industry by releasing digital television sets and reception

adapters compatible with all broadcast formats. This was followed by digital HD television sets

in 2000.

In 2000 management was replaced President Morishita with Senior Managing Director

Kunio Nakamura, implementing a new plan emphasizing what he called the 5 S’s; speed,

simplicity, strategy, sincerity, and smile. The company was beginning to lose the public’s trust,

and was attempting to get it back by reorganizing in 2003. Part of this was unifying the brand

under Panasonic to create global recognition of their products.

In 2004, Panasonic began an expansive partnership with Matsushita Electric

Works. The union of this joint venture initiated a new corporate group with significant

management resources. The 21st century has brought about more global competition and

therefore consumers demand products and services catered to their changing values and

increased reliance on technology and networks. By the end of 2004, the combined companies

operations released the first set of “Collaboration V-products,” including toilets, kitchenware,

and furniture (38). “Products…featured a combination of Panasonic Corporation’s energy-saving

and resource-saving technologies, user-friendliness that had been spawned by research results,

and Matsushita Electric Works’ space design technology and home solutions competency. This

was followed up by collaborative products in areas such as home safety, open area security, and

lighting” (38). The joint operations between Panasonic and Matsushita Electric lead to growth

and domination in the car navigation system market, which was boosting their revenue and

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profits (40). “Car-navigation sales make up 40% to 50% of $4.2 billion of revenue at

Matsushita's car electronics unit, Panasonic Automotive Systems. The subsidiary accounts for

6% of Matsushita's total group sales” (40).

Leading into 2005, Panasonic reached further to achieving a milestone of becoming the

number one share of plasma TV sets. “The Amagasaki Plant (the Third Domestic Plant), the

world's largest plasma display panel (PDP) plant, started operations in September 2005. By the

end of November, the plant achieved full manufacturing performance of 125,000 units monthly

in the first phase of operations” (38).

This was part of Panasonic’s efforts to accomplish their “Leap Ahead 21 Plan” starting in

2004, under President Nakamura. The plan, with the mission statement of “De-coustruct &

Create,” achieved the goal of “global survival levels,” where there was an operating profit ratio

of 5% or more and consolidated CCM of 0 or more (38). However, during this installation of

these goals, Senior Managing Director Fumio Ohtsubo took over as president of the company

and Nakamura moved into the chairman position. Ohtsubo declared that his mission as carrying

the brand name to be a representative of global excellence. “President Ohtsubo redefined [it as]

…making Panasonic into a company supported by stakeholders the world over by maintaining

innovation that is unyielding and implementing sound business activities on a global scale” (38).

Ohtsubo prompted a company that incorporates the strengths of each employee into a flowing

sequence of operations that leads to the manufacturing of goods and services that are strong and

reliable.

In the following year, a fourth plant was built and the total plasma display production

(PDP) reached a combined monthly tally of 460,000 units. In January 2007, the new mid-term

plan was announced: continue “steady growth accompanied by profits” to win the right to

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challenge for “global excellence” by 2009” (38). The construction of a Fifth Plant was

announced at the end of 2007 and would become operational by 2009. “In January 2008, the

latest panel technology was displayed at the Consumer Electronics Show held at Las Vegas,

USA. The cutting-edge and original technology of Panasonic Corporation revealed a significant

increase in the luminous efficiency of plasma panels, creating a huge sensation and winning high

accolades” (38). There was greater emphasis on panel displays that were thinner and larger

along with high definition and energy-saving features.

Ohtsubo’s idea of global excellence was more than just profitability and company

expansion; it also focused on environmental initiatives. Panasonic stated its “Eco Ideas

Declaration,” where accelerated environmental management. “The goal of paramount

importance was the reduction of CO2 emissions in manufacturing activities. Panasonic

Corporation has positioned CO2 emissions as a key management indicator along with sales,

operating profits, inventory, CCM, and others” (38). There were three goals that included an

approach to eco-friendly ideas in manufacturing with reducing CO2 emissions and conserving

resources and waste materials. One of those goals was creating energy-saving products and

recycling efforts and finally developing an environmental outreach with the local community as

well as overseas. This overall eco-friendly and environmental initiative increased Panasonic’s

competiveness in the growing market.

Panasonic brought the concept of sterilizing washers in China, in 2007; this was highly

effective here due to consumer preference and Panasonic taking advantage of that analysis. They

were the first big multinational to do so and were able to bolster consumer trust by releasing data

showing the technology’s effectiveness. As a result in no less than a year, the company’s sales

and place in the market for front-loading washing machines went from 3% to 15% in China (41).

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This has stimulated Panasonics to increase their global outlooks. “The company has placed new

emphasis on studying consumer lifestyles in additional markets so that it can continue to create

products that meet specific local needs. In 2009, Panasonic established a lifestyle research center

in Europe (Wiesbaden, Germany) and in 2010 brought similar capacities to India (the Volume

Zone Marketing Research Center in Delhi)” (41).

Since 2008, Panasonic has been attempting to increase its brand recognition. “According

to the CoreBrand Corporate Brand Index®, which has been tracking both the reputation of both

Matsushita and Panasonic brands since 2001, the Matsushita brand has been declining in Brand

Power at a slow but steady rate. Conversely, Panasonic has been growing in Brand Power, just as

steadily” (42). Panasonic’s brand power and recognition had been steadily increasing since 2006,

where brand power was 49.9 and by 2008 they reached 54.3. Panasonic began weighing the

brand with the familiarity and favorability rather than rebuilding the declining corporate brand.

“Much of this brand strength comes from the advertising behind Panasonic’s product brands. For

example, Toughbook has been marketed heavily under the Panasonic brand name…appeal to

public safety and emergency personnel and the advertising is quite effective in standing out in a

crowded field” (42).

Panasonic’s announcement in 2009 stated that they would restructure their motor

division, they hoped for strength in its management that would lead to further growth.

“Panasonic aims for further strengthening both finished product manufacture and device

businesses by vertically integrating Home Appliance and Automotive Motor, Industrial Motor

businesses, and finished products, which are expected to create the mutual synergy effects” (43).

Panasonic hoped that this synergy effect would strengthen its business structure. They focused

on customer relations and expanding through energy efficiency in home appliances as well as

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developing innovative automotive motor unit business. “Panasonic will liquidate Panasonic

Motor Matsusaka Co., Ltd., which is Panasonic's subsidiary company, for accelerating

manufacturing at global optimal locations after transferring compact AC geared motors and

industrial brushless motors to Panasonic Motor (Zhuhai) Co., Ltd” (43).

Competitor #3 – Samsung Electronics

Samsung Group was founded in 1938 by Byung-Chull Lee on March 1st (44). Lee started

his business in Taegu, Korea with 30,000 won (44). When the business first began, it primarily

focused on trade exports, selling dried Korean fish, vegetables, and fruit to Manchuria and

Beijing (44). A little over a decade later, Samsung had established its own flour mills and

confectionary machines, as well as its own manufacturing and sales operations (44). Samsung

established Samsung-Sanyo Electronics in 1969 (46). The newly established Samsung-Sanyo

Electronics began production on the Black-and-White television, model P-3202, the following

year in 1970 (44). The first Samsung black-and-white television went on sale in 1970 (46).

The decade of the 1970s brought about change for Samsung in regards to their exports

and market. Samsung Electronics was already a major manufacturer in the Korean market, but

during the seventies the company began exporting their products for the first time (44). The year

of 1972 brought about the production of black-and-white televisions for domestic sale (44).

Samsung Heavy Industries Company was incorporated in the year 1974, the same year that

Samsung Petrochemical was established (44). The company began production on washing

machines and refrigerators (44). Samsung’s black-and-white television market was booming by

1976, and the following year in 1977, the company started exporting colored televisions (44).

The mass production of microwave ovens began in 1979 for Samsung (44).

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During the 1980s, Samsung challenged itself to restructure old businesses and enter new

ones with the overall goal to become one of the world’s top five electronics companies (44). This

was the decade that Samsung began exporting more of its products to North America (46). Air

conditioners were produced by the company at the start of the decade in 1980 (44). The first

microwave ovens, model RE-705D, were exported overseas to Canada in 1981 (44). Two years

later, in 1983, Samsung began its production on its’ line of personal computers (44). The first

video cassette recorders (VCRs) were exported to the United States of America in 1984 (44). The

year 1986 brought about the development of the world’s smallest and lightest 4mm video tape

recorder (44). Samsung opened a new facility in 1987 for research and development purposes –

the Samsung Advanced Institute of Technology (44). This facility was one of the two institutes

that helped Samsung expand its reach into electronics, semiconductors, high polymer chemicals,

genetic engineering, optimal telecommunications, aerospace, and new fields of technology

innovation (44). Founding chairman Byung-Chull Lee passed away in 1987 after running

Samsung for almost 50 years (44). Byung-Chull Lee’s son, Kun-Hee Lee, succeeded him as the

new Chairman of Samsung (44). It was decided in 1988, with the merger of Samsung

Semiconductor & Telecommunications Company, that home appliances, telecommunications,

and semiconductors would become the core business lines for Samsung (44).

In a decade that presented difficult challenges for high-tech businesses due to mergers

and acquisitions, Samsung made the most of any opportunities that it was presented with (44).

Samsung completed the development of their mobile phone handset with the start of the new

decade in 1991 (44). The year of 1992 brought about many new developments for Samsung, as

well as other successfully ventures. The company developed a new mobile phone system, a

250MB hard disc drive, and the world’s first 64M DRAM (44). Samsung also made an

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acquisition of Kukje Securities Company, now known as Samsung Securities Company, Ltd.

(44). Another success for Samsung in 1992, was that the company began manufacturing in China

(44). The following year, the Samsung Advanced Institute of Technology successfully developed

the first-ever digital video disk recorder (DVD-R) (44). The world’s first four-power zoom

camera was developed by Samsung Aerospace in 1994 (44). 1994 also brought about the

development of the first Korean-built electric car (SEV-III) by Samsung Heavy Industries (44).

Samsung continued to introduce world firsts the following year in 1995. The Samsung Advanced

Institute of Technology continued its research success and developed the world’s first ever real-

time MPEG-3 technology (44). The world’s first 33 inch double-screen television was

introduced this year as well (44). The Samsung Entertainment Group was started in 1995 (44).

Samsung began mass producing the 64M DRAMs, originally developed in 1992, in 1996 (44). A

1G DRAM was also completed in 1996 alongside the development of the world’s fastest central

processing unit (CPU) – the Alpha chip (44). In July of 1996, Chairman Kun-Hee Lee, was

selected as a member of the International Olympic Committee which helped to enhance the

company’s image as a key contributor to world athletics (44). 1997 was another year of

successful developments for Samsung including the developments of the world’s lightest PCS,

the world’s largest TFT-LCD, and the world’s first 30-inch TFT-LCD (44). Samsung signed a

contract to become an Olympic Partner in the wireless equipment category for the Nagano

Winter Olympics in 1997 as well (44). The company also became a Worldwide Olympic Partner

in the wireless communications category in the same year (44). They served as an Olympic

Partner at the Nagano Winter Olympics in 1998 (44). Aside from being involved in the

Olympics, Samsung still had continued success in their normal production and everyday

operations. The company developed the world’s first 128MB Synchronous DRAM and 128

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Flash memory and also developed a completely flat-screen television in 1998 (44). Mass

production of the world’s first digital television began this year as well (44). The following year,

Samsung became the first company in the world to mass-produce and offer a full line of digital

televisions (44). The first 3D TFT-LCD monitor was developed by the company in 1999.

Samsung also developed a wireless Internet phone, a ‘Smartphone’, which was a small, multi-

function phone (44).

With the start of 2000, Samsung continued its success as a company into the start of the

21st century. Samsung developed the High Definition Digital television, as well as a unique all-

in-one DVD player (45). Samsung Electronics forms a strategic alliance with Yahoo! in 2000

(45). The company’s TV phone and watch phone make the Guinness Book of World Records for

the year 2000 (45). The Samsung Olympic Games Phone was selected as the official mobile

phone of the 2000 Sydney Olympic Games (45). Samsung also launched their PDA phone with

the start of the new century (45). Samsung was ranked Number One of the world’s top 100 IT

Companies by BusinessWeek in 2001 (45). The company released the industry’s first ultra-slim

handset in 2001 (45). They also developed the world’s first 40-inch TFT-LCD (45). In 2002,

Samsung successfully developed the 54-inch TFT-LCD, which was the world’s largest digital

television monitor (45). A new high-definition TFT-LCD color cellular phone was also launched

in 2002 (45). The company’s brand value ranked 25th in the entire world as of 2003 according to

Interbrand (45). They also ranked fifth on the “Most Admired Electronics Company” list which

was released by Fortune Magazine the same year (45). 2003 brought about the release of the first

HD DVD combo (45). Samsung’s continued success rolled over into 2004 with the production of

the first wrinkle-free steam washer (45). The company developed a 3rd Generation Optical Blu-

Ray Disc Recorder during 2004 and also released the world’s first 46-inch LCD television (45).

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Samsung’s mobile phone sales ranked at the top in Russia in 2004 (45). Samsung became the

official sponsor of the renowned English Premier League football club, Chelsea, in 2005 (45).

The company also ranked 27th according to Fortune Magazine on the “World’s Most Admired

Company” list for 2005 (45). The world’s first seven mega pixel camera phone was released by

Samsung during 2005 as well (45). Samsung developed the first speech recognition phone, the

largest flexible LCD panel, and the world’s first OLED for 40-inch televisions in 2005 (45).

The company’s success was continued into the latter half of the decade with the start of

2006. Samsung developed products like the world’s first real double-sided LCD, the world’s first

50nm 1G DRAM, and a 1.72-inch super-reflective LCD screen (45). The company also launched

products such as the “Stealth Vacuum” – a vacuum cleaner with the lowest level of noises, the

world’s first Blu-Ray disc player, and a 10M pixel camera phone in 2006 (45). As a company,

Samsung held the number one worldwide market share position for televisions for the seventh

year in a row, and was also the number one worldwide market share for LCDs for the sixth year

in a row as of 2007 (45). They also developed the world’s first 30nm-lass 64Gb NAND FlashTM

memory during 2007 (45). In 2008, Yoon-Woo Lee was named as a Vice Chairman and CEO of

Samsung Electronics (45). The company took the number one spot in the United States cellphone

market in 2008, and also launched their OMNIA phone (45). The company also held onto the

number one worldwide market share position for televisions for the 9th straight quarter in a row

(45). Samsung was found to be number one in customer loyalty for the 8th year in a row by Brand

Keys of the United States of America in 2009 (45). The company developed an innovative

hybrid digital camera, as well as the world’s first 40 nanometer DRAM in 2009 (45). Samsung

also released new products into the market in 2009 including the world’s thinnest Blu-ray player

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and the world’s first full HD camcorder with a 64GB SSD (45). Samsung decided to launch a

major restructuring of its businesses starting in 2009 (45).

With the start of 2010 and another new decade, Samsung continued it research,

developments, and success in the industry. The Samsung Galaxy Tab was introduced by the

company to the United States market (45). Samsung Electronics began mass producing the

industry’s first 3D television panels (45). Samsung developed a variety of products in 2010

including the world’s largest 19-inch transparent AMOLED display and the industry’s first 30-

nanometer-class DRAM (45). The company launched the OMNIA 7 which was the first

Windows Phone 7 smartphone (45). Samsung Electronics also launched the world’s first 3D

home theater and the first smartphone based on a Bada platform, WAVE, in 2010 (45).

According to Interbrand’s Best Global Brands, Samsung’s brand value was ranked number 19 in

the world as of 2010 (45). Management announced that as a company, Samsung would be

establishing seven social enterprises over the next three years in order to support the

underprivileged in Korea (45).

Competitor #4 – Sony Corporation

Sony was founded in 1946 as Totsuko in Nihonbashi, Tokyo with start-up capital of

190,000 yen for the research and manufacture of telecommunications and measuring equipment

(47) . The name wouldn’t be changed to Sony until 1958 because it became more recognized than

Totsuko, making it easier for people to buy stock on the Tokyo Stock Exchange as it was more

widely recognized (47).

In 1960 Sony established a branch in America and released the world’s first direct-view

portable TV (47). The next year Sony became the first Japanese company to offer shares in the

US on the New York Stock Exchange (47). In 1962 Sony released the world’s smallest and

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lightest all transistor TV (47). In 1965 Sony launched the Chromatron-type 19-inch color TV,

followed the next year by Sony’s first cassette tape recorder (47).

With the color TV market booming in 1970, Sony opened a new plant to assemble color

TV’s in Japan, this is the same year (47). In 1972 Sony opened a new color TV assembly plant in

San Diego, launched a VCR, and established a company to manufacture home video products

(47). The next year they launched a France and Spain branch, and won the first ever Emmy

awarded to a Japanese company for developing Trinitron color TV system (47). These events

were followed by yet another color TV plant opening in Wales the next year (47). The same year

they were officially listed on the New York Stock Exchange (48). Then following that

production expansion Sony launched a home-use ½ inch VCR, the Betamax in 1975

In 1979 Sony launched their first Walkman, beginning their entry into an industry they

would have a stranglehold on for several decades (49). In 1982 Sony launched the world’s first

CD player, which they two years later were able to merge with the portability of the Walkman

and released the Discman, a portable CD player (50). In 1988 Sony launched their first camera

for consumers, followed the next year by a small pocket 8mm camera (47). In 1989 they also

bought Columbia Pictures Entertainment, a movie production company (47).

In 1990 Sony launched an HD TV with the widescreen 16:9 format, one of the first of its

kind (47). In 1993 Sony Computer Entertainment was launched to begin developing the first

PlayStation (51). In 1994 Sony underwent a major strategic restructure of their company. In 1995

Sony introduced the first consumer handheld digital camera, and finished the new industry movie

format, the DVD (52). In 1997 development of “Digital Reality Creation,” technology to create

highly-realistic 4x picture resolution based on standard television signals, using Sony's exclusive

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digital signal processing algorithm, began (47). In addition they released the world's first

broadcast-use HD camcorder (47). This was followed the next year by a flat CRT monitor (47).

In 2001 Sony developed the world’s largest electroluminescent screen (13 inches), and

they opened a Bank in Japan (47). This same year Apple began its attack on Sony and their

stranglehold in the audio industry by releasing the iPod (53). The next year Sony purchased

Aiwa, a Japanese consumer electronics company specializing in audio and visual equipment

(47). In 2003 Sony shifted their organization to a “committee-based model” and launched the

Qualia brand, a high-end consumer electronics brand to showcase Sony’s best technology (47).

Sony then released the world’s first Blu-ray recorder (47).

In 2004 Sony established a financial holdings subsidiary, released the world’s first

consumer digital handheld video camera (47). They also developed a new high-resolution LCD

panel, the industry's first LCD device to meet advanced digital cinema specifications, setting the

global standard for digital cinema projectors (47). Finally, they ended the year developing the

world’s first mercury-free button-shaped battery (47). In 2005 Sony released the world’s smallest

handheld HD video camera, launched a new HDTV flat-screen, and replaced internal companies

with business groups restructuring the business (47). The next year they released the world’s first

Blu-ray disk drive for a notebook pc (47).

In 2008 Sony released a new LCD TV featuring the industry's highest level of energy

efficiency for 32-inch digital LCD TVs (47). In 2009 Sony released the world’s first handheld

camcorder with image detecting capabilities, they entered into an agreement with Sharp to

produce and sell large-sized LCD panels and modules, Sony unveiled the new message “make

believe”, in addition they developed multiple groundbreaking technologies such as a High frame-

rate single lens 3D camera technology, and Highly-efficient wireless power-transfer system

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based on magnetic resonance (47). They later used the 3D technology to come to an agreement

with FIFA to make the 2010 World Cup the world’s first 3D World Cup (54). In 2010 Sony

opened up a 3D technology center in California, introduced the world’s first HD camera with

interchangeable lens, Sony Internet TV powered by Google TV, an e-book reader, and a digital

music service (47).

4. Discussion of Relevant Historical Environmental Changes in the Industry

Macro-environment of the Consumer Electronics Industry

Japanese companies have long been recognized as innovators and current with popular

trends and modern society; however, Panasonic and Sharp have failed to comprehend and

acknowledge the changing and evolving consumer and their interests, where they are spending

their money. This failure to recognize and adapt to consumer change has caused their companies

to suffer greatly and lose revenue.

“Panasonic, Sony, Hitachi and Sharp reshaped how and where the world watched

television. These Japanese companies changed how the world behaves. Most, if not all of these

once invincible brands, are now paddling to stay afloat in turbulent waters…Sharp, Panasonic

and the like are learning the cost of shortsightedness and complacency. These household brands

once owned the consumer’s heart, mind, and disposable income…Instead they compete for table

stakes while Apple and Samsung compete for the adoration of a fervent market and the windfall

of profits that come along with it” (55). These companies failed to analyze the changing market

growth and introduce rapid innovation to compete with new vision and creativity coming from

competing companies.

Panasonic and Sharp continued to design and focus on marginalized strategies that could

not help them withstand the rapid evolving digital age. Bloomberg estimated in 2012 that

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Panasonic and Sharp’s combined market value was down and suffering about $32 billion loss

(56). Sharp was analyzed to have been hit the deepest; it was a company that “once dominated

the liquid-crystal-display TV market promised to make products that others want to imitate. In

the last five years though, its LCD sales have plunged 39 percent. As a result, Standard & Poor

axed Sharp’s credit rating to junk status. In 2012 Panasonic expected to lose $10 billion. It will

only get worse until things get better” (55).

In terms of the future of Japanese consumer-electronics, there is significant evidence that

they are losing their share in the global market. “They all struggle to compete in the most

important categories of consumer electronics against rivals such as Samsung of South Korea and

especially Apple of the United States” (57). The main issue for companies like Panasonic and

Sharp is that they failed to recognize the value and profitability of fast growing, quick software

that companies like Apple feature. These products and services are what consumers are

interested in and have a low-cost manufacturing foundation. Panasonic has recently decided to

step away from their losing markets in TVs and smartphones and focused their resources on

energy efficient products as well as car batteries. This decision is one that will help give them an

advantage in the future and surpass companies like Sharp.

However there is some hope for the future growth for Sharp as well as Panasonic in

greenhouses. “Some electronics giants are moving into a surprising new field: high-tech farming.

Fujitsu, Hitachi, Panasonic and Sharp are converting disused factory space and opening high-

tech greenhouses to grow vegetables, which are expensive in Japan” (57). Another element that

these companies need to conform to solidify success and increase growth, is to de-attach from

their traditional corporate cultures and processes. Companies like Sharp and Panasonic require

the futurist leadership that is willing to take risks and take back their domination in the electronic

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market.

Historical Competitive Forces of the Consumer Electronics Industry

Note: All Information in Historical Competitive Forces were identified by looking at Competitor,

Company, and Industry Historical Analysis Sections

Substitutes posed no threats in the consumer electronics industry. Customers either used

consumer electronics, or they didn’t. The threat of new entrants into the industry was moderate.

Most consumer electronics companies were formed prior to the 1950’s. After that, successful

new entrants became rare because research and development costs were high to start out. The

companies that were founded were constantly looking for new ventures, but there was a lot of

new ground to cover, a lot of new markets. Supplier power was a low threat in the industry. Most

companies developed their products in house, and the parts that were bought were common and

easy to find in other companies. With the constant evolution Sharp’s products went through, they

rarely stuck with specific supplies for long. Buyer power was a moderate threat for the industry.

Only until recently has the market for consumer electronics become saturated causing buyer

power to increase, but for decades the market was expanding with new innovations constantly

coming out. There was limited information on what was available prior to the internet

developing online retailers. What consumers knew, they learned from ads or store clerks. When a

buyer purchased a consumer electronic it used to be an event and a major purchase, allowing for

it to happen only a few times in any given year. The competitive environment of the consumer

electronics industry was a low threat. Buyer Demand was always growing for the latest greatest

product. Few rivals were producing the same product or same things. Most competitors

differentiated themselves. For example, Sharp focused on calculators and solar technology for a

couple of decades, while Sony focused on audio recordings, like the Walkman or Discman.

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Historical Dominant Economic Features for the Consumer Electronics Industry

Note: All Information in Historical Dominant Economic Features were identified by looking at

Competitor, Company, and Industry Historical Analysis Sections

Market Size and Growth Rate

Consumer electronics covers a wide range of things from refrigerators and microwaves,

to televisions and computers. The industry was seemingly growing for almost eighty years before

it showed signs of saturation. The typical life cycle usually didn’t exceed five years before the

21st century, but now they can reach up to twenty.

Scope of Competitive Rivalry

The competition was done on a global scale, with most companies founded in Asian

countries.

Demand and Supply Conditions

It was typically difficult to keep up with demand prior to the 21st century.

Market Segmentation

There are dozens of different segments that have developed within the industry

throughout history.

Pace of Technological Change

Each year companies were coming out with new technologies to compete in the market.

If companies weren’t coming out with multiple new technologies each year, they were falling

behind.

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Works Cited – Section 1

1. PDF12. http://www.fundinguniverse.com/company-histories/sharp-corporation-history/ 3. http://www.oldcalculatormuseum.com/w-comp31.html 4. http://www.vintagecalculators.com/html/sharp_qt-8d.html 5. http://museum.ipsj.or.jp/en/computer/office/0090.html 6. http://www.datamath.org/Related/Sharp/EL-8130.htm 7. http://www.nytimes.com/1983/12/06/business/us-court-reinstates-japan-tv-dumping-suit.html 8. http://www.sharpusa.com/aboutsharp/companyprofile/sharpandtechnologyhistory.aspx 9. http://sharp-world.com/100th/onlyone/1987L/ 10. http://sharp-world.com/100th/chronological/1980.html 11. http://sharp-world.com/100th/onlyone/1989/ 12. http://sharp-world.com/100th/onlyone/1989L/ 13. http://sharp-world.com/100th/onlyone/1990/ 14. http://sharp-world.com/100th/onlyone/1992/ 15. http://sharp-world.com/100th/onlyone/1993B/ 16. http://sharp-world.com/100th/onlyone/1993/ 17. http://sharp-world.com/100th/chronological/1990.html 18. http://sharp-world.com/100th/onlyone/2000/ 19. http://sharp-world.com/100th/onlyone/2001/ 20. http://www.sharp.eu/cps/rde/xchg/eu/hs.xsl/-/html/100th-anniversary.htm 21. https://corporate.bestbuy.com/about-best-buy/ 22. http://www.trefis.com/company?hm=BBY.trefis&# 23. http://www.forbes.com/sites/greatspeculations/2014/08/22/best-buys-q215-sales-to-be-

impacted-by-weak-consumer-electronics-market-but-long-term-prospects-remain-positive/24. http://www.forbes.com/companies/amazon/ 25. http://corporate.walmart.com/our-story/ 26. http://wallstcheatsheet.com/business/chop-chop-wal-mart-cuts-more-prices-on-consumer-

electronics.html/?a=viewall27. http://www.history.com/topics/inventions/alexander-graham-bell 28. http://www.history.com/topics/inventions/guglielmo-marconi 29. http://www.ieeeghn.org/wiki/images/8/87/Routray.pdf 30. http://www.timetoast.com/timelines/the-development-of-television 31. http://www.historyofinformation.com/expanded.php?id=707 32. http://www.cnn.com/2010/TECH/mobile/07/09/cooper.cell.phone.inventor/ 33. http://www.softschools.com/timelines/cell_phone_timeline/28/ 34. http://www.history.com/topics/inventions/invention-of-the-pc 35. http://www.ce.org/News/News-Releases/Press-Releases/2014/Consumer-Electronics-

Industry-Revenues-to-Reach-Al.aspx36. PDF537. http://www.lg.com/global/about-lg/corporate-information/at-a-glance/history 38. http://panasonic.net/history/corporate/chronicle/index.html 39. http://panasonic.net/history/corporate/chronicle/1968-01.html 40. http://articles.latimes.com/2004/jul/07/business/fi-navigation7 41. https://hbr.org/2012/12/what-panasonic-learned-in-china

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42. http://www.wiglafjournal.com/communication/2008/11/matsushita-out-panasonic-welcomes- a-new-brand-era/

43. http://news.panasonic.com/press/news/official.data/data.dir/en091102-5/en091102-5.html 44. http://www.samsung.com/us/aboutsamsung/corporateprofile/history06.html 45. http://www.samsung.com/us/aboutsamsung/samsung_group/history/timeline/index.html 46. http://www.businessinsider.com/history-of-samsung-2013-2?op=1 47. http://www.sony.net/SonyInfo/CorporateInfo/History/history.html 48. http://finance.yahoo.com/echarts?s=SNE+Interactive#%7B%22range%22%3A%22max

%22%2C%22scale%22%3A%22linear%22%7D49. http://content.time.com/time/nation/article/0,8599,1907884,00.html 50. http://ezinearticles.com/?A-Short-History-of-Discman&id=4121904 51. http://www.scei.co.jp/corporate/history/index_e.html 52. http://www.miqrogroove.com/writing/history-of-dvd/ 53. https://www.apple.com/pr/products/ipodhistory/ 54. http://www.sony.net/SonyInfo/News/Press/200912/09-137E/ 55. http://www.briansolis.com/2013/12/the-rise-and-fall-of-sony-panasonic-and-sharp-and-how-

to-survive-digital-darwinism/56. http://www.bloomberg.com/news/2012-09-09/sharp-faces-crisis-as-mechanical-pencil-

inventor-turns-100-tech.html57. http://www.economist.com/news/business/21606845-electronics-companies-japan-are-

starting-turn-themselves-around-they-are-shadow58. http://sharp-world.com/100th/hayakawa/ 59. http://www.sharp-world.com/corporate/info/ci/index.html 60. http://www.sharp-world.com/products/index.html

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Section 2 – Current Analysis

Subsection #1 – Company Profile

1. Discussion of Sharp Corporation’s Current Overall Strategy

Sharp has two divisions to their business, their product business and their device

business. Their product business is made up of digital information equipment, health and

environment equipment, energy solutions and business solutions. Their device business is made

up of LCDs and electronic devices. All of their products contribute to their overall strategy to

have an advantage against competitors. However, their strategy focuses on their LCD TVs and

their Energy Solutions business. A company’s competitive strategy deals with the specifics of

management’s game plan for competing successfully. They have to please their customers,

strengthen its market position, counter the maneuvers of rivals, respond to shifting market

conditions, and achieve a particular competitive advantage.

Sharp Corporation has a best-cost provider strategy. Best-cost provider strategies are a

hybrid of low-cost provider and differentiation strategies that aim at satisfying buyer

expectations on key quality, features, performance, service attributes and beating customer

expectations on price. Sharp offers products that will give customers more value for their money

by satisfying their needs and charging them a lower price than their rivals with similar products.

Sharp has strong technical expertise, they conduct Research and Development activities to

develop the technologies needed to constantly create new and improved products (1). They have

been undertaking initiatives to strengthen its energy solutions business; they have increased sales

of residential solar power generation systems based on their expertise and its extensive product

lineup (1). Sharp, through its subsidiary Recurrent Energy, develops and sells its own solar

power generation plants in the US. The company is working towards strengthening its energy

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solutions business further to leverage on the expected growth (1). Sharp's focus on expanding

operations across the value chain is helping them capture the growing demand for efficient

energy solutions and is helping them improve their sales and profitability (1). They are all about

giving their customers the best product they can, with their expertise, for the best price to have

advantage over their rivals.

Strong technical expertise helps the company to get a clear competitive edge in many

applications and regions of the world and helps to create a vertically integrated business model

centered on developing devices with innovative features (1). Sharp developed a super-fast

response (SFR) LCD technology that realizes clear unstressed images in a temperature range (1).

Sharp’ s SFR LCD also developed a proprietary pixel structure and new driving technology for

low-temperature conditions. The company will tap new markets for SFR LCD technology with a

wide range of applications (1). They include digital signage and car monitors for cold regions,

displays for smartphones and watches that can be used in winter sports settings, and monitors for

aircraft that can be used in ultralow temperatures in emergency situations (1). Also the company

developed a highly sensitive sensor system that can detect airborne microorganism such as fungi

and bacteria (1). The technical expertise behind these products has helped to drive costs down

making it possible for Sharp to offer similar products to the competitors at lower prices.

As the textbook mentions that when a company can incorporate appealing features, good

to excellent product performance or quality, or more satisfying customer service into its product

offering at a lower cost than rivals, then they have the “best-cost” status – it is the low cost

provider of a product or service with upscale attributes. Also they are a well-known brand they

have a good brand image, that will obviously give them competitive advantage over their rivals.

Being a well-known brand is not an easy task, but Sharp has a level of brand recognition that

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they have worked for years and competed for among other consumer electronics companies.

Sharp’s brand recognition gives them the ability to stick out amongst other companies providing

lower cost products like Sharp, keeping with the Best-Cost Strategy. Using this strategy they can

use its low cost advantage to underprice rivals whose products or services have a similar upscale

attributes and still earn attractive profits.

2. Discussion of Sharp Corporation’s Current Competitive Advantage in the Industry

Competitive Advantage: Years of Research and Development

Sharp’s biggest competitive advantage is the years of experience they have invested in

Research and Development. As evidenced in Sharp’s history they have been identifying and

developing unique technologies throughout Sharp’s entire history. Their focus has varied from

calculators, to solar cells and LCD’s just to name a few. They have dropped research on more

technology than other companies have ever researched. Sharp’s unique knowledge in consumer

electronics has them uniquely positioned to develop the next great technology.

3. Discussion of Sharp Corporation’s Current Strategy Relative to the 3 Tests of a

Winning Strategy

The three tests of a winning strategy are used to decide if the strategy fits the company’s

external and internal situation, build sustainable competitive advantage, and improve company

performance.

1. How well does the strategy fit the company’s situation?

Sharp’s best-cost provider strategy of offering their consumers more value for their

money by satisfying their needs and charging them a lower price than their rivals with similar

products. The strategy fits the company’s external situation since the consumer electronics

industry is a big and highly competitive industry. Since in this industry one of the hardest things

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is to create brand recognition, but Sharp already has strong brand recognition all over the world.

They’ve achieved this by being in many international markets. Sharp strategy fits perfect for the

external situation since they are providing good quality products for a good cost among their

competitors to give their consumers value for their money.

Best-cost provider strategy also fits the company’s internal situation since they have

strong technical expertise. They are working on creating and innovating the best products for

their consumers in order to have a competitive advantage over their competitors. Being a best-

cost provider they are matching their strategy to their internal resources and capabilities. The

company’s situation fits the strategy since they are known internationally and being in a big

industry with many competitors they have to have a strategy that will make consumers choose

their products instead of their competitors. By being the best-cost provider and giving their

consumers a good product for an affordable price.

2. Is the strategy helping the company achieve a sustainable competitive advantage?

Being in the Consumer Electronics industry and achieving a sustainable competitive

advantage is a very difficult thing to do. There is a lot of competition in the industry and all of

the companies have their own advantage. For Sharp their strategy is a good way to make

consumers choose their products over others products. Since in the industry most of the people

are not brand loyal they just want to get a good product with good quality for a good price their

strategy is a good way to get consumers to buy their products. Sharp’s LCD technology is one of

the leading technologies now in the market. They also sell some of their products to other

competitors for them to integrate into their own products. Sharp is doing a good job with their

products quality with their strong technical expertise.

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3. Is the strategy producing good company performance?

The mark of a winning strategy is strong company performance, with two kinds of

performance improvements; gains in profitability and financial strength, and advances in

company’s competitive strength and market standing. Sharp had a step back a couple of years

ago in which they lost a lot of money but now they are successfully recovering. Sharp, which

supplies panels for Apple Incorporation’s iPhone, increased demand from major customers led it

to earn an operating profit of 2.1 billion yen in its LCD panel business after posting a 9.5 billion

yen loss on the unit in the same quarter last year (2). Sharp issued guidance earlier this year for 1

trillion yen in sales from LCD panels for the year to March 2015 (2). They were having trouble

for a while but now they are getting stronger. They have business with Apple which is one of the

biggest companies now around the world, they are selling them panels for their iPhones, which is

a great thing for Sharp since there is a huge demand for Apple’s iPhones. Sharp had a rough time

for some years but now they are producing a good financial performance.

4. Discussion of Sharp Corporation’s Current Strategic Vision / Mission

Sharp Corporation has a business philosophy and a business creed that they, as a

company, follow and implement throughout the various aspects of their company’s strategy.

Similar to the mission statement and vision statement of a company, the business philosophy and

business creed describe the nature and purpose of a business, as well as a company’s potential

future or what they intend to be. More specifically, a company’s business philosophy is what a

company uses to determine how they handle their different aspects of operation (3). It is a deep-

rooted system of core beliefs that provide the reason that a company is in business at all (4). A

business philosophy needs to be specific, meaningful, and has to be something that the company

as a whole can operate by (4). Sharp Corporation’s current business philosophy is as follows:

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“We do not seek merely to expand our business volume. Rather, we are dedicated to the

use of our unique, innovative technology to contribute to the culture, benefits and welfare

of people throughout the world. It is the intention of our corporation to grow hand-in-

hand with our employees, encouraging and aiding them to reach their full potential and

improve their standard of living. Our future prosperity is directly linked to the prosperity

of our customers, dealers, and shareholders …indeed, the entire Sharp family.” (5)

The company’s business philosophy focuses on the company as a whole, their employees, and

its’ customers.

Sharp’s business philosophy has a system of core beliefs that they follow throughout the

aspects of their business. Their philosophy is specific and meaningful to the aspects of their

company. Sharp makes it a point to remain dedicated to the use of innovative technology on a

global scale that benefits people throughout the world. The company also makes their employees

an important part of their operations. Throughout the years, Sharp has implemented a variety of

employee programs that not only benefit the company, but have also benefited the employees’

lives. Such programs include the 3G, 1R strategy: Green Products, Green Factories, Green Mind,

and Recycling, (also known as the Super Green Activities), to improve their environmental

practices, using solar power systems throughout their factories and plants to make them

environmentally friendly, the Open Recruitment System where employees could work

throughout different areas of the company, and a program that sent employees inside and outside

of the company so they could gain a wider range of knowledge in the field to apply to their jobs

(PDF1).

Sharp’s focus on the company and its’ employees extends to the company’s business

creed. A company’s business creed is typically part of the mission statement and encompasses

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the company’s philosophy of conducting its business and dealing with its various stakeholders

(6). The business creed can also be used by a company as a guiding strategy for management and

employees in the course of day to day business (7). It often clarifies the objectives that guide an

organization’s behavior and operations (7). A company creed also communicates these

objectives, as well as the organization’s core values and beliefs, to the public (8). Typically

companies that communicate their objectives and values to the public in an effective manner to

the public, often attract committed customers and committed employees (8). The main point of a

company’s business creed is to get the word out to the public and tell the world what it believes

(8). Essentially the business creed of a company is used in order to state a company’s moral

values, and then broadcasts those stated values throughout the company, to its employees, and

customers (8).

Sharp Corporation’s present business creed for the company is:

“Sharp Corporation is dedicated to two principal ideals: ‘sincerity and creativity’. By

committing ourselves to these ideals, we can derive genuine satisfaction from our work,

while making a meaningful contribution to society. Sincerity is a virtue fundamental to

humanity…always be sincere. Harmony brings strength…trust each other and work

together. Politeness is a merit…always be courteous and respectful. Creativity promotes

progress…remain constantly aware of the need to innovate and improve. Courage is the

basis of a rewarding life…accept every challenge with a positive attitude.” (7)

Similar to Sharp’s business philosophy, their business creed also corresponds to every aspect of

their business running from top management down to their customers. Their business creed is

available to the public on through their website, as well as on the front page of their historical

PDF, which is also available from their website. Sharp’s business creed states its moral values as

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a company in a way that is relevant to the aspects of its core business. Their creed serves as a

guiding tool for management and the employees that work for Sharp. With Sharp’s current

business creed, they make it a point to state their moral values, and then broadcast it publically

so that their employees and customers are aware of Sharp’s moral values.

Sharp Corporation’s implementation of their 3G, 1R strategy in October of 1997, helped

to promote a more environmentally sustainable company (PDF1). The implementation of this

strategy by management helped the company focus on key points from the business creed. The

3G, 1R strategy, which stands for Green Products, Green Factories, Green Minds, and Recycling,

but has been renamed as the Super Green Activities, has helped Sharp to gain satisfaction from

the work that they do on top of contributing to society in meaningful ways. Beginning in 1997,

Sharp began moving toward becoming an environmentally sustainable company which meant

that they were shifting their focus towards “green” and “eco-friendly” products. Management

made it a point to shift their business models to a green mindset and transformed factories into

eco-friendly facilities and their products into products that were energy saving and recyclable.

Recycling became a part of Sharp’s eco-friendly and environmentally sustainable company

strategy and was implemented across the company as a whole. The eco-friendly and

environmentally safe factories and products that Sharp was now beginning to produce, on top of

their recycling initiative that was placed into action, helped Sharp make a meaningful

contribution to society and develop satisfaction from the work that they produce, which fits right

along with the business creed of their company.

Sharp Corporation’s current business philosophy and business creed are fitting with the

different programs and strategies that the company has implemented throughout the years. Sharp

needs to continue to focus on the moral values of the company, as well as what benefits their

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employees and customers. Making sure that they keep their moral values public and known to

their consumers and employees will only benefit the company, since their consumers and

employees are generally attracted to companies that make moral values publically known. Sharp

should also continue pursuing to be an environmentally sustainable company through every

aspect of their business because not only does this support both their business philosophy and

creed, but it also attracts customers and makes employees want to work for a company that

makes a meaningful contribution to the society and environment.

5. Identification of Sharp’s Core / Distinctive Competencies

Sharp’s three competencies are its focus on the Energy Solutions Business, high quality

LCD TVs, and constant focus on Research & Development.

Core Competencies:

Strong Focus on Energy Solutions Business:

Sharp’s Energy Solutions business is a core competency for Sharp (10). Sharp has been

researching solar technology since the early 70’s and has built up the knowledge of the market

segment that has helped to make them a leader in the technology of the Energy Solutions

business. They are currently transitioning their solar cell technology into their Energy Solutions

business as they have seen a decline in sales in that division and anticipate a continued drop (11).

Production of High Quality LCD Screens:

Sharp has been developing LCD technology since the 1970’s. The 70’s was when most

consumer electronics companies began innovating LCD technology (12). This is still a major

strength for Sharp because they have multiple decades worth of research into the LCD

technology that is used in their key market segment, TVs. It is this research that has provided

them with the top-of-the-industry high quality screens (13).

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Distinctive Competency:

Constant Focus on Research & Development:

Research and Development (R&D) for Sharp has been a constant for Sharp through the

years (14). They have constantly developed new technologies, spending over ¥130 Billion each

of the past five years in R&D (11). This is where Sharp has its distinctive competency, providing

Sharp with the best chance of improving its business by developing new technologies and

finding untapped markets. A recent example of this is their new Quattron technology that utilizes

four colors in a TV to make the color spectrum more vivid (15).

6. Current SWOT Analysis

Strengths

Production of High Quality LCD Screens:

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Strengths Weaknesses Opportunities ThreatsProduction of High Quality

LCD screensSluggish Performance

in Key ProductsIncreasing Demand for

New TechnologyIntense Competition

Diversified Product Portfolio

Heavy Reliance on Japanese Market

Expansion into the New Emerging Markets

Availability of Cheaper

AlternativesConstant Focus on

Research and Development

Quality Issues Lead to Recalls

Growing Mobile Phone Market in Asia

Exchange Rate Fluctuates

Well-Known Brand Import CompanyIncreasing Demand for

Health and Environmental Products

Saturated Market

Wide International Market Presence

Multiple Price Fixing Lawsuits

Be More Socially Responsible

Risk of Natural Calamities

Strong Focus on the Energy Solutions

BusinessSponsorship of Events,

Sports Tournaments, and Teams

Sharp SWOT Analysis

Consumer Confidence Near All-

Time Low

As evidenced from Sharp’s historical Analysis, Sharp has been developing LCD

technology since the 1970’s. The 70’s is when most consumer electronics companies began

innovating LCD technology (12). This makes it not a specific strength to Sharp, but it is still a

major strength because they have multiple decades worth of research into the LCD technology

that is used to reach their top form of sales. It is this research that has provided them with high

quality screens (13).

Diversified Product Portfolio:

Consumer Electronic companies must have a diversified company to survive with all of

the market segments in this industry, as evidenced by the constant innovation Sharp and its

competitors went through in their history. Sharp has TVs, LCD Monitors, High Resolution

Wireless Audio, Sound Bars, and Sound Systems (16). Under their appliance products they have

three different types of microwaves, and electronic air purification systems for whole rooms

(16). In addition they have a high-end brand called Aquos that has TVs, a phone, and a Smart

Board for businesses or schools. Some of their lesser known products include Projectors, Cash

Registers, Calculators, and Printers (16).

Constant Focus on Research & Development:

Research and Development (R&D) for Sharp is constant with their six different R&D

locations.(14) This is apparent throughout their history as they have constantly developed new

technologies. They have spent over ¥130 Billion each of the past five years on R&D.(11) this is

the 2014 annual report) This is where Sharp has the best chance of improving its business by

developing new technologies and finding untapped markets. An example of this is their new

Quattron technology that utilizes four colors in a TV to make the color spectrum more vivid (15).

Well-Known Brand:

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There are a lot of brands in consumer electronics that consumers don’t recognize. Sharp

is a brand that is widely recognized as a brand of strong performance and quality (17). Sharp

made steps throughout history to impress upon their consumer base that their lives can be

improved through Sharp products.

Wide International Market Presence:

Sharp is involved in countries across the globe spreading their diversified product

portfolio. Sharp has manufacturing plants, sales centers, and marketing in multiple countries on

all six populated continents (18).

Strong Focus on Energy Solutions Business:

Sharp has a subsidiary specifically focusing on Energy Solutions, one of their most

promising divisions (10). This division does audits on energy efficiency for companies along

with offering upgrades for solar, wind, hydro, and school projects (10). They are currently

transitioning their solar cell technology into their Energy Solutions business as they have seen a

decline in sales in that division and anticipate a continued drop (11).

Sponsorship of Events, Sports Tournaments, and Teams:

Sharp has an exclusive deal with the MLB for a sponsorship that provides them with

exclusive advertising rights, and several individual teams in the MLB, NBA, and NFL (19). This

goes a long way to tapping into the sport teams fan base. In addition, they sponsor events like

Memphis in May (19).

Weaknesses

Sluggish Performance in Key Products:

The LCD market is highly saturated and their major focus currently. Sharp is attempting

vertical integration of their LCD products, but has mostly just incurred increased maintenance

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and depreciation expenses as mentioned in note 15 on Sharp’s 2014 Annual Report. They have a

relatively small profit margin between the cost of goods sold and the selling point, and are not

selling enough volume to create a profit (11).

Heavy Reliance on Japanese Market:

While Sharp has an international presence in every market, they rely heavily on their

original Japan marketplace (11). Japan has consistently accounted for roughly half of Sharp’s

annual sales in the past five years (11). This failure to successfully penetrate other markets the

way they have in Japan is a weakness.

Quality Issues Lead to Recalls:

Sharp has issued multiple recalls in the past decade (20)(21)(22)(23). This is a liability

issue that is driving up costs, and damaging the brand image. This is likely a major reason for a

decline in profitability in recent years.

Import Company:

Sharp gets half of their sales from foreign countries, many of which require them to

import their products (11). This drives up the price of their products with higher taxes, making a

less attractive product.

Multiple Price Fixing Lawsuits:

Another liability issue is that Sharp has been accused of being involved in price fixing

twice in the past decade (24)(25). This is another issue that drives up costs, and hurts brand

image. Sharp’s legal issues continue to be a growing concern.

Opportunities

Increasing Demand for Technology:

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Consumers today are always looking for the latest and greatest technology (26). With a

strong enough new technology Sharp has the one of the greatest opportunities to grow their

profitability because of this.

Expansion into the New Emerging Markets:

There is always a new emerging technology market. Currently one of the biggest is

wearable technology (27). If Sharp were to enter this market they could grow profitability.

Growing Mobile Phone Market in Asia:

The Asian Market for mobile phones is growing, and currently accounts for two thirds of

the world market growth in mobile phones (28). It still only accounts for 42% of the world

mobile revenue (28). This is 2.5 Billion mobile phone users (29).

Increasing Demand for Healthy and Environmentally Friendly Products:

There is a growing demand for healthy products this is evident with people turning to

organic food, and health tracking technology (30)(31). There is also an increase in demand for

environmentally friendly technology. This is evident from the increase in businesses going green

(32). Both of these points are made increasingly clear with the extreme popularity of the Chipotle

brand that advertises a green brand with healthy food (33).

Be More Socially Responsible:

Sharp needs to clean up their image from the legal issues they’ve been battling recently.

Socially responsible behavior is a good way to improve a brand image.

Threats

Intense Competition:

The consumer electronics industry is highly competitive because most products are not

brand specific. Each brand has the ability to offer the same product. This has created an industry

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where competitors are consistently trying to undercut each other because there are few options

for differentiation.

Availability of Cheaper Alternatives:

Sharp is not the cheapest TV brand. There are a lot of cheaper alternatives more attractive

than Sharp (34).

Exchange Rate Fluctuations:

With Sharp located in so many different markets they are involved in a lot of currency

exchange. If currency exchange rates were to have an extreme drop in the middle of a trade, it

could create a major loss for Sharp.

Saturated Market:

The products that Sharp gets most of its income from are not unique to Sharp. These

products have been around long enough that the product lifespans have peaked and have now

been saturated.

Risk of Natural Calamities:

There is always a threat of natural disasters that could seriously disrupt distribution or

production of Sharp’s products. They already recently incurred an extraordinary loss because

they had to stop production in one of their plants for an unspecified reason that was out of the

ordinary (11). This would have to be a natural disaster to be referred to as an extraordinary

expense.

Consumer Confidence Near All-Time Low:

Sharp’s stock is at a price of $2.56 (35). This classifies it as a penny stock. The stock

market reflects consumer confidence which means consumers are not confident in Sharp. A low

consumer confidence is bad for getting investors, and finding people to purchase your products.

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7. General Discussion of the Current State of the Following Components

A. Finance / Accounting Analysis

*Disclaimer: All information from this section of the paper comes from the Sharp Corporation

Annual Reports for fiscal years 2011, 2012, and 2013, unless otherwise noted.

In order to properly analyze a company, a financial analysis should be performed to see

where the company stands. By performing a financial analysis, management will be able to if the

company is performing well and if it has an advantage, as well as if the company seems to be

struggling in certain aspects and does not have an advantage in its industry. Companies often

look at their financials to see where they stand at overall as a company. This can give

management and executives of the company insight as to what they are performing well in and

also what they are performing poorly in. Management can utilize the financials of their company

to improve on what they are not succeeding in.

For the financial analysis, the data in this section has been taken from Sharp

Corporation’s most current annual report, which was taken directly from their website. On the

company’s annual report, the data recorded dates back in most statements up to three years. The

purpose of using these statements is to analyze Sharp Corporation’s financial position. By

analyzing the recent and current financial position of the company, one can determine if the

company is headed in a good or poor direction. The annual report and the financial statements

also provide the information that is necessary to calculate specific financial ratios that will help

to provide a better understanding of the company’s current position within the consumer

electronics industry.

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Balance Sheet Discussion

The balance sheet is the first financial statement of Sharp Corporation that should be

analyzed. This statement shows the assets, liabilities, and stockholder’s equity of the company at

a specific date in time. Sharp Corporation refers to the stockholder’s equity section of their

balance sheet as net assets. The Accounting Equation, or Assets = Liabilities + Net Assets,

shows that the company’s assets are equal to the company’s debt obligations and any

investments made by shareholders, as well as any amount that is in the retained earnings account.

By taking a look at Sharp Corporation’s most recent fiscal year, a couple of key thins stand out

on the balance sheet. The current assets of the company, or the most liquid assets that the

company has, equals approximately 1.374 trillion yen for fiscal year 2013. On the other hand, the

company’s current liabilities equal approximately 1.551 trillion yen for the fiscal year. Ideally,

Sharp Corporation, or any company for that matter, wants their current assets amount to be

greater than their current liabilities. This way, the company can use its’ liquid assets in order to

cover its’ current liabilities. By looking at Sharp’s 2013 fiscal year amounts for current assets

and current liabilities, it becomes evident that this is not the case. The company’s current

liabilities exceed their current assets, which means that they do not have the ability to cover their

short term obligations, or will have problems doing so. This may become a problem for the

company if they continue to let their current liabilities exceed their current assets.

Sharp Corporation’s largest asset accounts for fiscal year 2013 include the ‘Machinery,

Equipment, Vehicles, and Others’ account, the ‘Buildings and Structures’ account, and the

‘Trade Receivables’ account. The ‘Machinery, Equipment, Vehicles, and Others’ account has

consistently been the largest current asset for the company during the last three year period. In

2013, the account had a balance of approximately 1.719 trillion yen. With Sharp being an

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international company and producing the amount of products they do, this amount makes sense.

The company has to make sure that all of their equipment and machines are up-to-date with

regulations. Since the company has plants internationally, they have to make sure that there is

enough equipment, machinery, vehicles, etc. for every plant / building that they operate. Adding

all of these costs together for every plant that exists, contributes to why the amount for the

‘Machinery, Equipment, Vehicles, and Others’ account is so high. The ‘Buildings and

Structures’ account for fiscal year 2013 has one of the larger amounts in the assets section of the

balance sheet for similar reasons. With the amount of plants that the company is operating

around the world, the amount for this account is expected to be high so that they can continue

operating and producing the amount of products that they do. The company has building and

structures for all of their plants which makes this number large. The third largest asset account

for fiscal year 2013 is the ‘Trade Receivables’ account which had about 423 billion yen. Trade

receivables are the amounts billed by a specific business, in this case Sharp Corporation, to its

customers when it delivers goods or services to them throughout the ordinary course of business.

Since Sharp has recorded the trade receivables under the current assets section of their balance

sheet, the company is expecting to receive payment from its customers within one year for the

delivery of their goods and services.

The largest liability accounts for fiscal year 2013 include the ‘Short Term Borrowings’

account, the ‘Trade Payables’ account, and the ‘Long Term Debt’ account. The Short Term

Borrowings account for fiscal year 2013 is approximately 793 billion yen. The current assets of

the company for this year would be able to cover the short term borrowings for the company.

The following chart shows what the short term borrowings for Sharp Corporation include:

Short Term Borrowings for Sharp CorporationShort term borrowings including current portion of long-term debt as of March 31, 2012,

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2013, and 2014 consisted of the following:Yen (Millions)

2012 (Fiscal 2011) 2013 (Fiscal 2012) 2014 (Fiscal 2013)Bank Loans 199,085 610,254 626,528Commercial Paper 351,000 0 0Current Portion of Long Term Debt

47,912 313,859 166,670

Total 597,997 924,113 166,670The weighted average interest rates of short term borrowings as of March 31, 2012, 2013, and 2014 were 0.5%, 1.8%, and 2.2%, respectively.

The bank loans are the largest portion of the short term borrowings that the company has taken

on. It is important to bring this number down in future years because Sharp does not want to

continue to rely on bank loans in order to continue operations. The ‘Trade Payables’ account is

also a relatively large liability account for the company. Its total for fiscal year 2013 is about 347

billion yen. Trade payables are the opposite of trade receivables in the sense that they are the

amount that is billed to a specific company by its suppliers for any goods delivered or services

provided by the company during the ordinary course of business. Sharp must be expecting to pay

their trade payables of 347 billion yen off within a year because they have recorded them under

the current liabilities section of their balance sheet. The third largest 2013 fiscal year liability

account is the ‘Long Term Debt’ account which is roughly 300 billion yen. Sharp Corporation’s

long term debt could include loans and financial obligations that last over one year. The

company has acquired a number of loans and bonds over the last couple of years, some of which

were due in 2012 and others that are not due until the year 2031. The interest on all of these

debts vary.

Income Statement Discussion

The income statement, also known as the consolidated statement of operations, measures

a company’s financial performance over a certain period of time. This statement essentially

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shows the success that a company has had with its operations. The company’s financial

performance is assessed through a summary of how the business incurs it revenues and expenses

through both operating and non-operating activities. The net profit or net loss of the company is

shown on this statement, which is significant for management to know. Although the equation

for the income statement is relatively simple: Revenues – Expenses = Net Income or Net Loss,

the equation also takes into account a variety of other elements including depreciation,

amortization, interest, and a variety of loss provisions. The income statement can give

management and investors a lot of information about the company, including information about

past performance and what the future could hold.

Sharp Corporation’s income statement shows management and investors that the

company has gone through a rough past couple of years. Fiscal year 2013 was the first time since

fiscal year 2010 that the company was able to sustain a net income. By taking a look at the

income statements for Sharp Corporation from fiscal years 2011 and 2012, one would see that

the company sustained net losses in the billions. Most notably, fiscal year 2012 recorded a net

loss of approximately 545 billion yen. One major contribution to the net losses sustained in 2011

and 2012 was the suspension to the production of large-size LCD panels in the company which

added to extraordinary operating expenses for these two years. Sharp was able to produce a net

income of approximately 11 billion yen for fiscal year 2013. Net sales for 2013 rose 18.1% from

fiscal year 2012, totaling 2.927 trillion yen. The company’s operating income went from a 146

billion yen deficit, to a positive 108 billion income in 2013. After sustaining significant net

losses for two fiscal years in a row, the company’s management decided that it was time for

some changes which in turn impacted the net income the resulted in fiscal 2013.

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Sharp Corporation made it a point to generate and strengthen the sales of their distinctive

devices and original products. Sharp incorporated full-HD panels into their Quattron Pro

Televisions and equipped their smartphones with IGZO LCDs, solar cells, and small and

medium sized LCDs. All of this was done to improve on their products and make them next

generation by incorporating the latest technology. Management made it a point in 2013 to

improve on the company’s business foundation, which included inventory reduction, capital

investment restriction, and radical cuts in overall costs. By doing this the company’s net sales

improved because Sharp was selling products that were not only original to the company, but

also equipped with the latest technology. Also, the company had implemented new business

strategies across the company which reduce inventory, costs, and losses during fiscal 2013. All

of these actions that were taken by the company helped to get Sharp to pull out a net income for

2013.

Statement of Cash Flows Discussion

The statement of cash flows for Sharp Corporation specifically shows how cash is

flowing in and out of the business. By looking at this statement, one is able to see the net change

in cash used in operating activities by the company, financing activities by the company, and

investing activities by the company. The cash flows statement starts off by stating the net income

or net loss for Sharp Corporation, and then adjusts it to reconcile for the net cash that is provided

by any operating activities that happened during the fiscal year. The statement then proceeds into

the investing activities section, followed by the financing activities section. The overall change

in cash and cash equivalents for the fiscal year is shown at the bottom of the statement of cash

flows for Sharp Corporation.

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The largest account on the cash flows statement is the repayments of long term debt

account, which is located in the cash flows from financing activities section of the statement.

These repayments of long term debt are approximately worth negative 289 billion yen. One

reason that this account might have such a high balance is because Sharp maintains long term

debt with their building, equipment, machinery, and vehicle purchases. These company assets are

often long lived, so there is typically a significant amount of debt attached to them.

The last couple of lines on the cash flows statement for Sharp Corporation, show the

change in the cash and cash equivalents account from the beginning of the period to the end of

the period. By looking at these last couple of lines, the company will be able to see the overall

effect that cash had during the fiscal year of 2013. In 2013, cash and cash equivalents had an

increase of around 162 billion yen from the beginning of the year to the end of the year. This

shows that the company had positive cash earnings, which was the first time they did this in a

couple years. Although the company has not had a positive outlook in the past, if Sharp

Corporation continues on the same financial path as they did for fiscal year 2013, then the

company should be okay. If the company can post improving net sales and increase their net

income from year to year, then Sharp Corporation will be in for a healthy financial recovery over

the next couple of years.

Stock Discussion

Sharp Corporation stock was first listed on the Tokyo Stock Exchange in 1956 (36). The

company’s stock had also been listed on the Osaka Stock Exchange since 1949 (36). However,

on July 16, 2013, there was an integration of the cash equity markets of the Tokyo Stock

Exchange and the Osaka Securities Exchange, therefore Sharp’s stock is now only listed on the

Tokyo Stock Exchange (36). The securities code, or ticker symbol, for the company in Japan is

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6753:JP (36). The closing price for Sharp Corporation, 6753, on the Tokyo Stock Exchange, for

December 1, 2014, was 287.00 yen (37). The change in the stock price from the previous day’s

closing price rose 4.00, which translates to a percentage increase of 1.41%. The 52 week high for

the company’s stock price was recorded on January 21, 2014 at 386.00 yen (37). The company’s

52 week low stock price came in approximately 3 months later on April 30, 2014 at 254.00 yen

(37).

The chart above shows Sharp Corporation stock at its 52 week high and low for the past year

(38). The stock price for the company has moved between the two prices, but has stayed

relatively right in the middle of the two prices. Over the course of the past two months, the stock

price for Sharp has unfortunately navigated to toward the 52 week low.

Sharp Corporation has a unique dividend policy. The company considers one of

management’s top priorities to be distributing profits to shareholders (39). The company has

implemented a policy to pay out two dividends annually, a year-end dividend as well as an

interim dividend (39). Sharp’s Board of Directors makes the decision regarding the payment of

the interim dividend, while the year-end dividend is decided upon by the general meeting of

shareholders (39). Cash dividends per share of common stock since fiscal year 2007 are as

follows (39):

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YenInterim Year-End Annual

Fiscal Year 2014 0 0 (forecast) 0 (forecast)Fiscal Year 2013 0 0 0Fiscal Year 2012 0 0 0Fiscal Year 2011 5 5 10Fiscal Year 2010 10 7 17Fiscal Year 2009 7 10 17Fiscal Year 2008 14 7 21Fiscal Year 2007 14 14 28

As shown in the table, no dividends have been distributed or declared by the company since

fiscal year 2011. On the Tokyo Stock Exchange, or when one looks up Sharp’s stock, they will

notice that no dividends are listed. This chart helps to support why. The board of directors and

shareholders have chosen not to declare any dividends for the past couple of years.

Ratio Analysis

Gross Profit Margin

A company’s gross profit margin is used to assess a firm’s financial health by revealing

the proportion of money left over from revenues after accounting for the cost of goods sold. The

gross profit margin serves as the main source of paying for addition expenses and future savings.

The equation for gross profit margin is simple: [(Revenues – Cost of Goods Sold) / (Revenues)].

Taken alone, Sharp Corporation’s gross profit margin cannot give a good indication of its’

financial health as a company. The following chart shows Sharp Corporation’s gross profit

margin for fiscal years 2011, 2012, and 2013:

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Net Sales 2,455,850 2,478,586 2,927,186Cost of Sales 2,043,842 2,218,003 2,396,344

Gross Profit Margin 16.78% 10.51% 18.13%

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Sharp Corporation’s gross profit margin has been relatively steady over the past three years.

There has not been a dramatic jump or drop in the gross profit margin. A stable gross profit

margin for a company is typically a good thing because that means that the company is able to

grow and management can build on the company from year to year. A company’s gross profit

margin needs to be adequate, otherwise the company will not be able to pay its operating and

other expenses which is important. Another important thing to note is that the results of a

company that produces a large range of products, such as Sharp Corporation, will have varying

gross profit margins.

Inventory Turnover Ratio

Inventory is an important part of Sharp Corporation’s business. The inventory turnover

ratio means a lot to them because it tells them how many times the company’s inventory is being

sold or replaced over a certain number of days or a certain period. The equation used to find this

ratio is, Sales / Inventory. Sharp’s inventory turnover for the previous three fiscal years are as

follows:

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Net Sales 2,455,850 2,478,586 2,927,186Inventory 527,483 310,709 295,126

Inventory Turnover 4.66 7.98 9.92

In other words, the company sold its inventory 4.66 times over throughout the course of the 2011

fiscal year, 7.98 times over throughout the course of the 2012 fiscal year, and 9.92 times over

throughout the course of the 2013 fiscal year. Sharp’s inventory turnover ratio has been steadily

improving over the course of the past three years. For fiscal year 2013, Sharp is efficiently

selling their inventory because they are consistently turning over their inventory throughout the

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year at a high rate. The company is effectively selling the inventory that it produces and makes to

sell to its customers around the world. Similar, to the company’s gross profit margin, the

inventory turnover ratio cannot be taken into account alone in order to consider the financial

health of the company. The inventory turnover ratio shows that the company is turning over its

inventory at a very good rate, but other factors have to be taken into consideration in order to

evaluate the overall financial health of the company.

Current Ratio

The current ratio of a company measures the company’s ability to pay its’ short term

obligations. The equation for this ratio is simple, current assets / current liabilities. Sharp would

use this ratio in order to get an idea of their ability to pay back any short term debt and payables

they owe with their short term assets. The current ratio can give the company a sense of the

efficiency of their operating cycle or their ability to turn product into cash. Sharp Corporation’s

current ratios for fiscal years 2011 through 2013 are in the chart below.

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Current Assets 1,421,125 1,221,835 1,374,244Current Liabilities 1,391,080 1,667,533 1,551,625

Current Ratio 1.02 0.73 0.89

Sharp Corporation’s current ratio in fiscal year 2011 was approximately one. However, in fiscal

years 2012 and 2013, the company’s current ratio fell to below one which is unhealthy. Typically

current ratios under one mean that the company would be unable to pay off its obligations or

debts if they became due at that specific point in time. Looking at the current liability and current

asset amounts for both fiscal years 2012 and 2013, one can see that the current liabilities exceed

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the current assets for both years which becomes a problem. However, it is important to note, that

the current ratio did improve slightly from fiscal 2012 to fiscal 2013.

Acid-Test Ratio

The acid-test ratio is similar to the current ratio of a company, however only certain

current assets are taken into consideration in the calculation, unlike the current ratio where it is

the total current asset amount. The equation for the acid-test ratio is as follows: (Cash +

Accounts Receivable + Short Term Investments) / Current Liabilities. The acid-test ratio tells a

company whether it has enough short term assets to its immediate liabilities without selling off

its inventory. The following chart shows the acid-test ratios for Sharp Corporation for the past

three fiscal years:

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Acid-Test Ratio 0.47 0.45 0.61The acid-test ratio results for Sharp Corporation for the past three fiscal years are under one.

Companies that have acid-test ratios under one are unable to pay their current liabilities and will

be looked at with caution because this is not a place where companies want to be. Sharp

Corporation’s ratios for this test are low, which indicates that they have not been performing

where they need to in order to be able to pay off their current liabilities if necessary.

Debt to Equity Ratio

The debt to equity ratio is a leverage ratio that compares a company’s total liabilities to

its total shareholders’ equity. This ratio is a measurement of how much suppliers, lenders, and

creditors have committed to the company versus what the shareholders have committed to the

company. The equation used for this ratio is total liabilities / net assets. Ideally, companies want

this percentage to be lower because that means that their company would be using less leverage

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and would therefore have a stronger equity position. The chart below shows Sharp’s debt to

equity ratios for fiscal years 2011 through 2013.

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Total Liabilities 1,969,015 1,952,926 1,974,507Net Assets (Shareholders’ Equity)

645,120 134,837 207,173

Debt to Equity Ratio 305% 1448% 953%

Unfortunately for Sharp, their debt to equity ratios for the past three fiscal years did not turn out

great percentages. The percentages for the company were very large due to the fact that Sharp’s

creditors, suppliers, and lenders have a lot more money invested in the company than Sharp’s

equity holders or investors. The larger the total liabilities amount is and the smaller the total net

assets amount is, the larger the debt to equity ratio is going to be from year to year. This is the

case with Sharp.

Debt to Assets Ratio

On the other hand, the debt to assets ratio for a company is a leverage ratio that is an

indicator of the proportion of a company’s assets that are being financed with debt versus equity.

Ideally, a company wants this ratio to be lower, just like the debt to equity ratio because the

higher the ratio is, there is a greater risk that the company will not be able to pay back its debts.

The debt to assets ratio for a company is used to determine the financial risk of a business. The

equation for this ratio is simply total liabilities / total assets. The following chart is Sharp’s debt

to assets ratio for the past three fiscal years.

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Total Liabilities 1,969,015 1,952,926 1,974,507Total Assets 2,614,135 2,087,763 2,181,680

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Debt to Assets Ratio 75.32% 93.54% 90.50%

The debt to assets ratios for the last three fiscal years have produced better results for Sharp

Corporation. In all three fiscal years, the company’s shareholders funded more assets than debt.

In fiscal year 2013, 90.50% of the company’s assets are owned shareholders and not creditors of

the company. This ratio provides a positive outlook on the financials for Sharp Corporation

because they were able to have positive results for three straight fiscal years with the same ratio

which is positive for investors.

Asset Turnover Ratio

This equation for the asset turnover ratio is simple, sales / total assets. The asset turnover

ratio shows the amount of sales or revenues generated per dollar of assets. This ratio is an

indicator of the efficiency with which a company is deploying its assets. Ideally, companies

would like for their asset turnover ratio to be a higher value because this means that the company

is generating more revenues per dollar of assets. Sharp Corporation’s asset turnover ratio for

fiscal years 2011, 2012, and 2013 are shown in the chart below.

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Net Sales 2,455,850 2,478,586 2,927,186Total Assets 2,614,135 2,087,763 2,181,680

Asset Turnover Ratio 0.89 1.05 1.16

The asset turnover ratio has improved steadily over the past three fiscal years. There is still room

for improvement for Sharp Corporation, as the company’s overall asset turnover ratio is still

fairly low.

Profit Margin Ratio

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The profit margin ratio is a profitability ratio that is calculated as net income / sales. The

ratio measures how much of every dollar of sales a company actually keeps in earnings. The

profit margin ratio is useful when comparing companies across industries. A higher profit margin

is ideal because it indicates a more profitable company that has better control over its costs.

Similar to other ratios, the profit margin ratio should not be looked at alone. It should be taken

into consideration with other ratios to determine the financial health or well-being of a company.

The following chart shows Sharp’s profit margin ratios for the past three fiscal years:

Yen (Millions)2012 (2011 Fiscal) 2013 (2012 Fiscal) 2014 (2013 Fiscal)

Net Income (Loss) (376,076) (545,347) 11,559Net Sales 2,455,850 2,478,586 2,927,186

Profit Margin Ratio -15.31% -22.00% 0.39%

Sharp Corporation’s profit margin ratio is not very promising. For fiscal years 2011 and 2012,

both profit margin ratios are negative because the company sustained net losses during those

years. Unfortunately for the company, since net losses were sustained during those two years,

they were not able to keep any earnings because they did not make anything. Fiscal year 2013

brought about a change. The profit margin ratio for the most recent fiscal year was 0.39%. Even

though this percentage is not as high as the company would like it to be, it is improvement and a

step in the right direction. If the company can maintain a net income and continue to increase its

sales from year to year, it is likely that the profit margin ratio will grow with it.

B. Marketing Analysis

Marketing has to deal with the “four P’s” which are Product, Price, Place, and Promotion.

The marketing analysis of Sharp Corporation will include a detailed breakdown of those four

components. As explained earlier in the paper, Sharp Corporation’s current strategy focuses on

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expanding into the energy industry, particularly solar energy. The next section will address the

current marketing strategy of Sharp Corporation in accordance with their overall current strategy.

Products

Sharp Corporation sells a variety of products across the Unites States and internationally.

The products that Sharp sells are broken down into two divisions: consumer products and

business and industrial products. From here the divisions are broken down into categories, for

consumer products these categories include: audio-visual, home office, mobile, home appliances,

solar, LED lights and plasmacluster (40). For business and industrial the categories include:

office and commercial, solar, electronic components, LED lights, and plasmacluster (40). In each

category the products listed for that category. The audio-visual category includes products such

as TVs AQUOS, blue-ray disc recorders/players and home theatre. The home office category

includes products such as calculators, facsimiles/ multi-functions, electronic diaries, and

telephones (40). The mobile category includes products such as mobile phones/smartphones. The

home appliances category includes products such as refrigerators, superheated ovens, air

conditioners, washing machines, vacuum cleaners, air purifiers, and robotic appliances.

The audio and visual section includes TVs AQUOS, blue-ray disc recorders/ players and

home theater. Some models of AQUOS TVs vary upon availability based on country. Sharp

offers the AQUOS model line domestically, but offers the AQUOS Quattron models only to

ASEAN countries (43). The AQUOS comes in four different models, the AQUOS 4K Ultra HD,

the AQUOS Q+, AQUOS Q, and the AQUOS HD (42). The AQUOS 4K Ultra HD is designed

to ensure that the viewer sees every detail projected through the screen and portray a more

realistic picture. “Ensures that every pixel delivers precisely the scene the director intended”

(42). The AQUOS 4K Ultra HD earned the THX 4K certification going through over 400

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rigorous tests —confirming it delivers accurate images and pristine video performance in every

frame, and ensuring the filmmaker’s vision is recreated perfectly in your home. AQUOS 4K

delivers amazing detail, gorgeous depth, and consistent color for the ultimate viewing experience

(42). The AQUOS 4K is also considered a “smart tv” meaning the TV has built in Wi-Fi

capability, can download open apps, and touch screen technology to name a few. The 4K also

posses SPECTROS rich color display. The AQUOS 4K boasts a 21% wider color spectrum*

than a conventional LED HDTV and produces more vibrant and diverse color, so each frame is

brilliantly recreated as the director intended. With more shades of red and green, you experience

more realistic landscapes, lush nature scenes and natural skin tones. (44). The AQUOS Q+

model is a rise above your standard HD TV. The Q+ has 10 million more subpixels than standard

Full HD TVs, which gives it better detail, depth, and color. It also includes smart technologies

just like the 4K where a person’s favorite apps are just a click away. The Q+ plus posses a

technology called mobile connectivity powered by Sharp’s exclusive SmartCentral 3.0 mobile

app (45). The SmartCentral 3.0 app allows a person to now virtually control everything you do

on your Smart TV, can be done from your tablet or smartphone.  Search and discover new

content without interrupting what you're watching and launch it seamlessly. Change channels,

volume or inputs and adjust picture settings. Share videos, pictures, and music from your device

to the large screen (45). The Q+ plus also contain a technology called Miracast. Miracast is a

screen mirroring technology, anything on your smartphone, tablet or laptop can be viewed in

glorious high definition TV without a wired connection (45). The AQUOS Q LED TVs featuring

Quattron technology have 33% more subpixels than standard Full HD, for finer details and a

billion more shades of color (46). The Q also has SmartCentral 3.0 and Miracast technologies

capabilities also comes with all of consumers best apps. The AQUOS HD delivers the highest

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standard of HD picture quality. The HD contains SmartCentral 3.0 and also has the capability to

access a person’s favorite apps (47).

The mobile division is a new interest of Sharp but doesn’t seem to be taking off too well. The

company only offers three models of mobile devices: the AQUOS Crystal 306SH, the AQUOS

phone 3D SH80F, and the SE-02 (41). The AQUOS Crystal emphasizes crystal clear everything

from audio to screen clarity. The AQUOS phone 3D SH80F emphasizes the capability to capture

3D pictures and record 3D videos. This all made possible through their twin-lens 3D camera and

audio stereoscopic LCD screen (41). The SE-02 is fully touch screen and has built in digital TV

to keep its consumer up to date on the latest episode of their favorite shows (48). These phones

are available through the mobile service providers of Sprint, Sprint Prepaid, Boost Mobile, and

Virgin Mobile.

The home appliances division offers a variety of appliances. The first product offered is a

calculator. Sharp offers two different kinds of calculators, scientific calculators and electronic or

standard calculators. The company offers eight different models for the scientific calculator and

twelve different models for their digital calculator, which also come in a variety of colors. This

division also offers facsimiles/ multi-functions, which are products such as laser copying and

printing, scanning and faxing machines. The company offers two multifunction machines and

eight facsimiles. The home office division also offers electronic dictionaries and telephones that

require a landline, but are available in wireless for mobility around the house or office where the

phone is located. The home appliances division offers a variety of products, which are listed

above. Out of these list of products the most interesting product would have to be their robotic

appliance. This robotic appliance is a vacuum that not only vacuums on its own but can talk, and

act as an air purifier using Sharp’s trademarked plasmacluster technology (47).

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Sharp has become very interested in the solar energy industry in the past 50 years,

beginning in 1959 when the company started development of solar cells. As a manufacturer of

products that consume large amounts of electricity the company has always felt it was their

responsibility to create electricity as well (50). The company has vision to fix the problem of

how our lifestyles are endangering our environment and also have the answer to fix this problem.

That answer being the sun, which is a clean, safe, and limitless energy source. The amount of

carbon dioxide being released into the atmosphere by our burning of fossil fuels has created

enough air pollution to be a threat to both the environment and our own health. Global warming

is gradually melting the polar ice caps and causing sea levels to rise. And as our dependency on

harmful carbon-based energy gains speed, the need for a clean, safe, and plentiful alternative

energy source grows stronger (50). Sharp’s answer to this problem is simply the sun. On a clear

day, solar energy of approximately one kilowatt per square meter reaches the Earth's surface.

Harnessing this energy produces no CO2 emissions, it's free, and unlike energy resources buried

beneath the ground, solar energy can be found anywhere (50).

"If we could find a way of generating electricity from limitless solar heat and light, that

would benefit humankind to an extent we can scarcely imagine." Tokuji Hayakawa, founder of

Sharp Corporation (50). The company provides solar panel to many different purposes:

commercial, residential, industrial, public, personal, and special. The purpose of commercial

solar panels range from covering walls of skyscrapers, reduce the air-conditioning load of an

office building, snow melting, and to effectively utilize roof space atop buildings (51).

Residential solar panels are mostly used as a blind to hide outdoor equipment and used mostly on

rooftops of apartment building and condominiums (51). The purpose for Sharp’s industrial solar

panels is to build state-of-the-art super green factories, to build mega solar power plants, and the

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covering factory rooftops with their solar panels. The public purpose of Sharp’s solar panels is to

have entire towns adopt to their solar cells, have government offices use them to show they are

environmentally aware, and for educational institutions (51). The only purpose for personal solar

energy is Sharp’s new solar module for mobile devices (51). Sharp’s special purposes for solar

cells include: the Orihime/Hikoboshi satellites stay in flight with light from the sun, a conversion

rate of 37% high efficiency for use in outer space, and lights powered by solar energy light way

for ships (51).

There are three key points as to why Sharp Corporation excels in Mega-Solar solutions:

Optimal efficiency through system designs, high-quality conservation and maintenance services,

and guaranteed system efficiency (52). For Sharp’s solar energy division they use three key

points gain what they call “total optimization.” This total optimization concept basically means

they see all of their solar energy projects from start to finish. This includes the thorough design

of the system, the maintenance and conservation of entire system. The first key point in Sharp’s

success in Mega-Solar solution s optimal efficiency through systems designs. In this step Sharp

basically designs every aspect of the solar system that is being built. This includes determining

the key factors to maximize the efficiency of a mega-solar power-generation system. These

include the placement locations of junction boxes, inverters, and other related equipment and

facilities, as well as the length of the electrical cables used—a factor that influences power loss

(53). Generally, ambient temperature can by itself greatly affect the number of solar modules

required to produce a given amount of energy at a solar power plant. In hot climates, more

modules are required than is indicated in standard specifications, while in cold climates fewer

modules are required to obtain the same amount of energy (53). All of these factors are closely

examined when the design of the system is being created by Sharp. The next key point to Sharp’s

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success in mega-solar solutions is their high-quality conservation and maintenance services of

the entire system. Once a mega-solar power plant is built the system must run constantly and

stably, through the maintenance and conservation of Sharp this is made possible. Mega-solar

power plants have been built in many different countries and regions. Each area has its own

unique environmental conditions that result in different types and amounts of dust and dirt

accumulating on the solar panels. To achieve stable output requires maintenance and cleaning

that match both the system design and the environment where the plant operates (54). An

important procedure to keep these systems running optimal efficiency is simply to keep them

clean. Along with this cleaning process comes the knowledge of proper timing to do the

cleaning, which Sharp has acquired over the 50 years they have been in the business. To clean

the module surface, Sharp uses specially purified water to remove the kind of dirt that modules

are subject to. This purified water does no harm to the environment (54). In order to provide a

total solar-power solution, Sharp has established its own maintenance company to service power

plants in the long term and ensure that customers enjoy years of sustained power-generating

efficiency. Even after a power plant begins operation, it continues to receive support from this

company in the form of proper maintenance at the appropriate times (55). The final key point to

Sharp’s success in mega-solar solutions is the company’s guaranteed system efficiency. Simply

guaranteeing the output of the individual modules and the related equipment does not guarantee

the efficiency of the overall solar power plant. A total solar-power solution involves

guaranteeing that the entire system will deliver its promised power-generating efficiency (55).

Sharp not only guarantees the solar module the entire system that also includes the whole

systems ongoing efficiency from the plant to the local power grid. Sharp also conducts

simulations that allow them to calculate that the plant is running at it’s full potential or where it

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is set to be running at. Sharp has accumulated valuable data and experience based on more than

50 years of installing and operating solar power equipment in harsh environments such as outer

space, oceans, deserts, and extremely cold climates. That's why we can conduct highly accurate

simulations based on real-world data and provide system-efficiency guarantees for the entire

power plant, thereby minimizing the risk for our customers in the solar business (55).

(55)

The diagram above shows Sharp’s step-by-step procedures the company takes when starting a

new project.

Sharp has developed four different cell types to go along with their solar modules:

Monocyrstalline, Polycrystalline, Thin-Film, and Other. Monocrystalline cells are used in in the

company’s solar modules in space on satellite and in very warm regions such as desert areas. The

Polycrystalline cells are high-efficiency electrically generation, high reliability crystal silicon

solar cells (56). Thin-Film cells are basically the company’s least sophisticated cells developed.

The Thin-Film cells are low cost, see through thin-film silicon that delivers expanded capabilities

and can be used in any place and all types of environments (56). For example the Thin-Film cell

can be used to collect light during the day and then illuminate during the night through LED

lights.

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Promotion

Since Sharp Corporation has been struggling with sales the company is aiming to target

the ASEAN region to boost these numbers in efforts to help company’s performance. The

ASEAN stands for Association of Southeast Asian Nations (57). Countries in the ASEAN region

are expected to play a major role in leading the development of the world market (59) . This area

is expected to see booming demand for consumer electronics and Sharp has already come up

with plans for campaigns and social action programs (58). To compensate for this boom and

higher demand for these products Sharps is planning to build a manufacturing plant in Indonesia,

this plant will be the largest manufacturing plant in the country (58). Due to their focus in the

ASEAN region this is where the company is putting most of their marketing efforts. Sharp has

come up with three major promotional strategies, the first being called “MATSURI”, the second

named “LOVE.LIFE” and the third being a blue service bus (59). The MATSURI campaign is

named after a Japanese festival. In this campaign people dress up in kimonos and carry a display

decorated with lanterns and flags resembling a mikoshi throughout the city (59). While carrying

the displaying the people dressed up in kimonos are dancing to the festive music and the beats of

a drum that would be played at a Matsuri (59). But really the music and beating of the drums is

coming from the display where Sharp television has been placed and on the screen is the playing

of and actual Matsuri festival. This strategy gains the attention of people who stop to look and

begin to gather around the display. This strategy is great because it directly relates the people to

their culture but using Sharp display to make that connection.

In 2013, Sharp launched its LOVE.LIFE campaign in the ASEAN region (59). Through

this campaign, Sharp introduces its value-added products aimed to evoke the love of family and

support the enrichment of their lives (59). The company also included a popular Japanese

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cartoon character for the face of their campaign. This cartoon character being, Doraemon who

represents Japan’s cutting edge technology while he impersonates innovation from the

customers’ perspective and delivers ideas to enrich people’s lives at the same time (59).

The third promotional strategy is best known as the “service bus.” Throughout Indonesia Sharp

has blue buses that go from city to city to repair Sharp products. When the bus arrives at a city

people gather around the bus bringing Sharp products from their houses that need serviced or

replaced (59). Upon the bus opening, the bus also has displays that allow consumers to view new

products that available. Since Indonesia is made up of over 13,000 islands this is way for Sharp

to still provide services to their customers without constructing a physical building on every

island; although the company does have a total of 366 service centers in the country of Indonesia

(59).

In 2013 Sharp did a promotional campaign to boost its customer satisfaction in Japan. To

start the company they started monitoring their customer service assistant center agents and

based on the operators performance depended on whether the agent needed to undergo training to

improve their skills. The skills that were being reviewed are the operator’s responsiveness in

terms of providing assistance that matches the customer’s inquiry, as well as their methods of

speaking and listening (60). This enables the agents to maintain a high level of response skills

while also boosting their awareness of customer satisfaction (60). The next area Sharp turned to

boost their customer satisfaction was their support section of its website. Sharp decided to

enhance this section of their website so customers could solve problems without calling the

Customer Assistance Center. The website now provides enhanced customer-oriented services

that include Fault Diagnosis Navigation, where customers themselves diagnose the symptoms

and solve problems by following instructions on the screen (60). The company also has Visual

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Guide, which employs video images to explain how to maintain products (60). To help solve

common issues that many customers encounter Sharp has a toll-free number that gives

automated responses to help solve the customer’s issues. By doing this, the caller does not have

to wait for the next available operator, which sometimes can be very time consuming. But rather

the customer can fix the problem on their own by listening to a previously recorded operator who

will walk the person through step-by-step directions on how to fix the issues they are facing.

In December 2013 Sharp Corporation launched the “Post Your Comment Campaign” on their

website which was offered to the countries of Indonesia, Malaysia, Singapore, and Thailand. The

Campaign asked two questions based on their plasmacluster ion technology; the first question

being, “ What do you think the Plasmacluster Ion Technology is capable of?” and the second

question being, “What would you like the Plasmacluster Ion Technology to be capable of?” For

question one there were four possible answers to choose from: air can be purified, odors can be

removed, dust can be suppressed, and monsters can be defeated (61). The answer “air can be

purified” got the most response with 686 voices (61%), “odors can be removed” was next with

80 voices (15%), then “dust can be suppressed” with 98 voices (12%), with the least response

“monsters can be defeated” with 61 voices (12%). For the second question there were five

possible answers to choose from: car, refrigerator, hair dryer, robot, and air conditioner (61).

The answer with the most responses was “air conditioner” with 446 voices (41%), next was the

answer “car” with 193 voices (29%), followed by “refrigerator” with 62 voices (12%), then

“robot” with 11 voices (9%), and the answer with the least voices was “hair dryer” with 9 voices

(9%). The percentages displayed above are the percent of the voters who thought this was the

best feature. Over the promotional campaign ran for a little over a year and acquired the attention

of over 1600 voices (61).

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In Australia, Sharp was recently running a promotion where if a person bought one Sharp

product, the customer would receive a bonus gift. One promotion was for if a person purchased

a qualifying Sharp microwave oven the buyer would receive a bonus gift (62). Another

promotion was if a person purchased a qualifying Sharp refrigerator and the buyer would receive

a bonus gift (62). The company also offered a promotion where if a person brought in any

competitor’s product to upgrade to a Sharp product, the company would give that customer a

debit card with an amount of money loaded on it. For example sharp ran a promotion where if a

person brought in a competing product of Sharp’s A3 MFD and upgraded to Sharp’s A3 MFD,

that customer would receive and $250 debit card (62).

Sharp also uses conventions to promote their new, up and coming products. In 2014 the

company debuted its next generation AQUOS BOARD interactive displays at InfoComm (63).

InfoComm is the largest professional AV show in the world. Also at this convention Sharp

decided to showcase their future, value-added commercial displays, which are available in a

wide range of sizes and capabilities (63) Sharp’s booth at the convention focused collaboration in

everyday settings and highlight how Sharp's interactive technology empowers attendees to

Collaborate Your Way (63). "Our booth will show attendees how far interactive communications

and collaboration have evolved by allowing users to share and move content between devices.

Communication has never been easier and these ubiquitous platforms allow for true collaboration

across businesses,” said Mike Marusic, Senior VP, Marketing and Operations. Meaning the

company wants to show off how much they have evolved and how much more advanced they

have become in the electronic world. The company will demonstrate this by allowing attendee

physically operate demos on display for themselves.

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Sharp Corporation uses a total of seven social media network across five major regions to

spread news of the company. The seven social media networks Sharp uses are Facebook,

Twitter, Youtube, Google+, Pinterest, Webchat, and Weibo (64). The major regions where Sharp

uses social media networks are North America, Asia, Europe, Australia, and the Middle

East/Africa. In North America Sharp uses the social media networks: Facebook, Twitter,

Google+, Youtube, and Pinterest. In Asia the company uses Facebook, Twitter, Youtube,

Webchat, and Weibo social media networks. In Europe the company uses three social media

networks: Facebook, Twitter, and Youtube. In Australia the company on uses Facebook. And in

the Middle East/Africa the company also only uses Facebook (64). In each region the country

may be promoting or advertising different products, some of the products of which aren’t even

offered in the other countries.

Price

When a company is approaching marketing any product a major marketing strategy

element is setting the right price for that product. If the price of a product is set too high or too

low for the target market then this result in a negative effect on the sales of the product. Other

major elements that share a key role in what pricing strategy should be used are: target market,

profit margin needed, growth strategy for the company and market share. (78). Sharp

Corporation products uses an economy pricing strategy for their consumer electronic products

and use a premium pricing strategy for their solar energy products. Economy pricing is where the

costs of marketing and promoting a product are kept to a minimum or a no frills low price (73).

In economy pricing the margins are wafer thin and the company targets the mass market and a

high market share. Economy pricing usually represents the lowest price a company can charge

for good or services. The economy pricing strategy can help undercut current price levels of

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current competitors by offering a similar product with no frills or fancy features. Companies do

not usually spend a lot of money on administrative features, such as marketing or branding

strategies, when using economy pricing (77). One of the best examples of economy pricing is the

airline business. Airlines are always trying to keep their overheads as low as possible and in

return the company gives the consumer a relatively lower price to fill the company’s aircraft. At

first the seats are sold at a very cheap price (almost at a promotional price) and the middle

majority are economy seats, the highest price being paid for the last few seats available on that

flight (which would be a premium pricing strategy) (73). In a time of recession, economy pricing

sees more sales due the lack of consumers’ disposable income.

On the other hand Sharp’s solar energy products are sold at premium pricing strategy,

which is using a high price where there is a unique brand. This approach is used where a

substantial competitive advantage exists and the marketer is safe in the knowledge that they can

charge a relatively higher price (73). Using premium pricing strategy involves setting the price

of a product higher than similar products being sold by rivals. Premium pricing strategy is to

maximize profits where there are no substitutes for the product, where there are barriers to

entering the market or when the seller cannot save on costs by producing at a volume (78). By

using premium pricing Sharp can also improve its identity in the market or better known as

price-quality signaling. Price- quality signaling is called this because the high price signals to the

consumers that the product is high in quality. This signaling can also be used to give the

company an aspirational image (78). Although premium pricing is not usually used if there is

direct competition for the product: competition tends to undercut prices and lead to poor sales.

Because premium pricing can cause these effects it would be wise to only use this strategy for a

short-term amount of time. But the longer the company can keep its competitive advantage over

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rivals by using this strategy, the longer it can charge a premium price (78). Since solar energy

products are considered unique products, Sharps has the ability to charge a premium price for

these products. Sharp also has some of the most experience in solar energy being one of the first

companies first companies in the industry more than 50 years ago. Since the market for more

environmental friendly solutions is growing globally and the demand for this kind of energy

solution continues to develop, Sharp is planning to take full advantage of this market with their

already obtained knowledge and experience and begin to develop it further more into more

advanced energy efficient technology.

Place

Sharp products are available through an extensive nationwide network of authorized

retailers and dealers (74). Sharp products can be found in 164 countries around the world. There

many benefits that come from purchasing Sharp products from a Sharp authorized dealer. The

first reason being is the knowledgeable sales personnel, trained directly by the manufacturer and

these trained personnel have a direct relationship with the Sharp customer service staff (74). The

second reason being products purchased by authorized retailers are covered under the

manufacturer’s limited warranty retailers have an up-to-date inventory of proper Sharp

accessories and will have continuous access to these updates (74). The final reason being

Product registration and support via Sharp's AQUOS® Advantage Live which, upon registration,

includes an additional 3 months on the one year manufacturer's limited warranty (74). There are

also a few risks to not buying Sharp products from a Sharp authorized retailer. The first risk

being that the product will not contain the most up-to-date product information or the product

may even be counterfeit. Another risk of not purchasing from a Sharp authorized retailer would

be the risk of purchasing products that have already been opened or tampered with prior to the

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purchase. The final risk is no seller accountability for products that may be damaged during

shipping and also the exorbitant restocking fees (74). In the United States the authorized retailers

of Sharp products are the following: Best Buy, HH Gregg Appliances and electronics, Sears,

Target, Amazon, Costco, Sam’s Club, BJ’s, ABC Warehouse, Abt, Adorama, B&H, BrandsMart

U.S.A., Conn’s HomePlus, Cowboy Maloney’s Electric City, Crutchfield, Curaco, Dell,

Electronic Express, Frys.com, Modia, Howard’s Apppliance ans Bigscreen Superstore,

Magnolia, Nebraska Furniture Mart, Huppin’s, Paul’s TV, P.C. Richard, RCWilley, SuperCo,

US Appliance, Video & Audio Center, and Walts (76). At all 32 retailers across the United

States a consumer can find a variety of Sharp products available.

In 2013 Sharp partnered with QNET to market two of their Plasmacluster Ion Air

Purifiers models on QNET’s redemption e-store (75). QNET is one of Asia’s leading Direct

Selling companies comprising around five million customers and distributors around the world.

The company offers a varied portfolio of lifestyle products and services through its proprietary e-

commerce platform, along with a dynamic network marketing business opportunity (75). QNET

is directly selling these Plasmacluster Ion Air Purifiers, but rather using them as redemption

products through their reward program. Through QNET customers can accumulate points

through their reward program from where customers can claim gifts in exchange for the points

they have earned; the Sharp air purifiers being two of these that can be redeemed in exchange for

points (75). Sharp air purifiers are available in the QNET redemption e-Store and other regional

retails in Delhi, Mumbai, Kolkata and Bangalore.

The Association of Southeast Asian Nations (ASEAN) region is becoming the most

important market for Sharp Corporation due the soon coming increase in demand consumer

electronic products. The ASEAN region consists ten members: Brunei, Cambodia, Indonesia,

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Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam (79). In this

alliance the ten countries are promoting economic and political cooperation by fostering dialogue

between those ten members of ASEAN (79). To prepare for this boom in consumer electronics

Sharp has already begun plans to build a manufacturing company in Indonesia, which will be the

countries largest manufacturing plant, as said in the promotional section. To compensate until the

demand boom, the company has service buses running around selling products and have

numerous retail stores located throughout the region.

C. Management Analysis

Sharp Corporation operates in two business segments: The Electronics Equipment

segment and The Electronic Component segment (65). The Electronics Equipment segment is all

about audio, video and communication products, which include televisions, projectors,

refrigerators, microwaves, air conditioners, copy machines etc. (65). The second segment is the

Electronic Component segment which provides liquid related product such as liquid crystal

display modules, solar cells, also electronic devices, such as parts of satellite broadcasting,

regulators and optical sensors (65).

Sharp’s business philosophy contains a statement of “Our future prosperity is directly

linked to the prosperity of our customers, dealers and shareholders...indeed, the entire Sharp

family” (72). Under this philosophy their basic concept concerning corporate governance is to

maximize corporate value through swift and accurate management that preserves transparency,

objectivity and soundness (72).

Sharp’s corporate governance system involves the Board of Directors, which supervises

directors’ execution of duties. They also have the Audit & Supervisory Board, which audits the

business executions of directors, and the Executive Officer System, which divides the

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supervisory and decision-making functions from the business execution functions (72). With

their audit & supervisory board members and the Audit & Supervisory Board, Sharp appoints

outside independent corporate auditors in order to reinforce the monitoring and checking

functions on the management and strengthen the corporate governance system (72). By

appointing outside directors and setting up various committees to enhance the supervisory

functions of the Board of Directors, Sharp believes that its corporate governance system is

adequate in terms of their philosophy mentioned before.

Sharp selects outside directors who have international, multi-faceted and compliance

perspectives on wide-ranging issues, such as the social and economic environment, and the

future direction of Sharp (72). They attempt to strengthen the decision-making functions within

the Board of Directors and the functions for supervising directors’ execution of duties. They also

have the Executive Officer System, which divides the supervisory and decision-making functions

from the business execution functions, and creating a structure that steadily facilitates nimble,

efficient business execution (72). In addition, they introduced the Business Group system, which

corresponds to the specific characteristics of their businesses (8). Under the system, they are

making reforms aimed at creating a one-stop management structure that handles development,

production and sales (72).

Kozo Takahashi is the Executive President since June 2013 (66). He joined the company

in 1980. He used to be the Chief Director of Overseas Business, Managing Executive Officer and

Chief Director of America in the company (66). He previously headed the health and

environmental products division as well as the company’s U.S. operations (68). Shigeaki

Mizushima is one of the Representative Directors, Executive Vice Presidents, and Chief

Technology Officer since May 2013 (66). He started in the company since April 1980 (66).

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Tetsuo Onishi is one of the Representative Directors, Executive Vice Presidents, and Group

General Manager (67). Onishi started in the company in 1979, he used to be the Director of

Accounting in Main Accounting Unit (66). Norikazu Hoshi has been serving as the Senior

Managing Executive Officer and Representative Director since June 2013 (66). He joined the

company in 1978; he used to serve the company as the Chief Director of 1st display Device

production and Chief of Director of Display Device Business (66). Fujikazu Nakayama is one of

the Representative Directors and Senior Managing Executive Officer (66). He joined the

company in 1978, he used to serve the company as the Director of Document System Business

(66). Yoshihiro Hashimoto is one of the Directors, Managing Executive Officer and Deputy

Chief Senior Director of Corporate since June 2013 (66). Before joining the company he used to

work for The Sanwa Bank, The Bank of Tokyo-Mitsubishi, and Mitsubishi Capital Corporation

(66). Yumiko Ito is one of the Directors and Executive Officer since June 2013 (66). She used to

work for GE Healthcare Japan Corporation, IBM Japan, Ltd. and Microsoft Japan Corporation

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(66). Makoto Kato has been serving as a Director in the company since June 2011 (66). He used

to be a Senior Managing Director, Vice President and Vice Chairman of the Board in ITOCHU

Corporation (66). Mikinao Kitada serves as another Director at Sharp Corporation. Akihiro

Hashimoto and Shigeo Ohyagi are Directors in the Board (67).

In 2013 they had many changes in the human resource part. They promoted Executive

Vice President Kozo Takashi to President replacing Takashi Okuda who became President in

2012. Okuda sold company assets and mortgaged its headquarters to raise funds after losses on

TVs and liquid-crystal displays drove Sharp to a record $3.7 billion net loss in the year ended

March 2012 (68). Takahashi is currently in charge of the company’s products business group,

which includes TV sets and mobile phones (68). Sharp introduced a new staff evaluation system

that is based on the performance of individual managers (70). Each employee sets their own a

goal in consultation with their boss twice a year. Takahashi considers it crucial for all employees

to challenge themselves without fear of failure (70). Sharp forecasted net income of 5 billion yen

for the year to March 2014, its first annual profit in three years, after job cuts (69). The company

sold a stake in its largest LCD plant to Taiwanese billionaire Terry Gou to boost sales through

his Foxconn Technology Group, which is the world’s biggest contract manufacturer of

electronics (69).

In 2013 they implemented a Medium-term Management Plan valid until the end of fiscal

2015 (PDF2). Under the “Medium-term Management Plan,” they defined fiscal 2013, the first

year, as a “Restructuring Stage” and fiscal 2014 and 2015 as a “Re-Growth Stage,” where they

will step up effort to full-scale growth, therefore realizing “recovery and growth” (PDF2). In

order for them to accomplish their target they have come up with three basic strategies; shift to

advantageous markets and fields, exit closed innovation and aggressively use alliances, enforce

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executions by innovating governance system (PDF2). Being more specific they will use many

strategic measures including: restructuring business portfolio, improving profitability of LCD

business, expanding overseas businesses focusing on the ASEAN (Association of Southeast Asia

Nations) Market, reducing fixed costs by introducing all-company cost restructuring innovation,

and improving financial position (PDF2). As they explain in their new plan that it “serves to

protect and enhance corporate value and common interests of shareholders and provides rules

to enable the shareholders to adequately judge the situation by requiring Large-Scale

Purchasers of Sharp’s shares to provide sufficient information including, but not limited to, the

purposes and methods of the purchase, the amount and type of consideration, basis for

determination of the purchase price, and by giving the Board of Directors of Sharp an adequate

Assessment Period” (PDF2).

Subsection #2 – Industry Profile

1. Identification and Discussion of Relevant Competitors

A. Relevant Information Regarding the Financial Position of Key Competitors

In order to properly analyze an industry, a financial analysis among key competitors

should be performed to see where each company stands in regards to one another. By performing

a financial analysis, you will be able to see what companies are performing the strongest and

have an advantage, as well as which companies seem to be struggling and do not have an

advantage in the industry. Companies often look at their competitors and compare themselves

from a financial standpoint to see where they stand. This can give management insight as to what

they are performing well in and also what they are performing poorly in on an industry basis.

Management can utilize the financials of competitors to better position themselves in an industry

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by working off of what other companies seem to be succeeding in and implementing that into

their business.

No matter what industry you are in or are looking at, every industry has competitors. This

stands true in the consumer electronics industry, which has become increasingly competitive

throughout the past couple decades. Sharp Corporation’s key competitors are other consumer

electronics companies that could be considered close substitutes for Sharp as whole company or

Sharp’s product lines individually. Sharp Corporation’s relevant key competitors are LG

Electronics, Panasonic Corporation, Samsung Electronics, and Sony Corporation.

Competitor #1: LG Electronics

Disclaimer: All Information used for this section was taken from the 2012 Annual Report and

2013 Consolidated Financial Statements for LG Electronics. Please refer to those documents for

support.

LG Electronics has become a global leader and innovator of technology in not only the

consumer electronics industry, but in the mobile communications and home appliances industries

as well. The company is comprised of five business units in total including: Home

Entertainment, Mobile Communications, Home Appliance, Air Conditioning & Energy Solution,

and Vehicle Components. Since they implement a global business policy and play an active role

in world markets, LG Electronics has a global presence controlling 114 local subsidiaries

throughout the world while employing approximately 87,000 executives and employees. As a

company, LG Electronics strives to deliver digital products and services that make their

customers’ lives better, easier, and happier with functionality and fun.

Balance Sheet Discussion

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LG Electronics balance sheet for Fiscal Year 2013 is seemingly impressive in regards to

their assets given their actual financial position in the marketplace. The company has a total

current assets number of 16.3 trillion won for fiscal year 2013. The current assets cover the

company’s current liabilities for fiscal year 2013 which are equal to 15.01 trillion won. This

means that if necessary, LG could use their most liquid assets, or assets that are easily converted

to cash, to cover their short term debt obligations to creditors. This is a positive sign for the

company. The company’s current assets would not be able to pay off the company’s total debt

for fiscal 2013 which is equal to 22.8 trillion won. The current assets would only be able to cover

approximately 71.5% of the total liabilities that the company has taken on for the year. This is

not a terrible sign for the company, but it does not show that the company can cover all of their

liabilities if something were to happen where they would need to pay debts off starting

immediately.

LG Electronics’ largest asset on their balance sheet for fiscal year 2013 is the property,

plant, and equipment account. This account has a total value of 10.3 trillion won for the year.

Similar to Sharp Corporation, this account has been the largest asset account for LG for the past

three fiscal years. This is a result of the fact that the company is an international company with

multiple locations. Within the multiple locations, there are buildings and equipment in order to

manufacture and produce all of the products that they make. This asset account would be one of

the larger accounts on the balance sheet for a consumer electronics company because of the

business they are in. One thing to note about LG’s balance sheet is that their cash and cash

equivalent’s account is equal to 2.6 trillion won. Although significant, when compared to

different liabilities that the company has, this cash amount would not cover any of the larger

liabilities such as trade payables, borrowings, or other payables if it was necessary. All of these

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liability amounts alone are greater than the cash amount. This could become a problem if the

company found that they had to pay off some of their liabilities.

Income Statement Discussion

LG Electronics net sales have increased steadily over the past couple years. The

company’s net sales for fiscal year 2013 are equal to 58.1 trillion won. Something to note about

the income statement is that their cost of sales is relatively high when compared to their net sales.

This means that the gross profit is low. The cost of sales for consumer electronics companies is

generally high due to the amount of money that needs to be invested in producing their goods

and manufacturing them. However, when the gross profit is low, that does not leave much room

for a company to pay expenses and other fees. LG Electronics largest expense for fiscal year

2013 is its selling and administrative expense account which is 7.04 trillion won. This account

has consistently been one of the company’s largest expense accounts.

Stock Discussion

Unlike Sharp Corporation, LG Electronics is traded on the Korean Stock Exchange and

has declared a dividend. The closing price for LG Electronics stock on December 1, 2014 was

63,800 won (81). The company had a 52 week high of 79,600 won and a 52 week low of 58,800

won. Unlike Sharp Corporation, LG’s stock price did not remain steady between the high and

low prices (82). There was a significant amount of increase and decrease in the stock price over

the course of 52 weeks. The price steadily climbed from its low price and then steadily declined

from its high price (82). The current stock price over the past 2 months for LG Electronics has

remained relatively steady around similar values. There have not been any significant increases

or decreases to the stock price.

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Competitor #2: Panasonic Corporation

Disclaimer: All Information used for this section was taken from the 2013 Annual Report for

Panasonic Corporation. Please refer to this document for support.

Panasonic Corporation is a consumer electronics company that manufactures and sells

various electronic and electric products under the Panasonic name worldwide (83). Panasonic is

comprised of over 634 companies that manufacture and market a wide range of products under

the specific Panasonic brand to enhance and enrich lifestyles all over the world (84). Products

produced by Panasonic include digital AV products such as flat screen televisions and projectors,

Blu-ray disc players, recorders, and theaters, DVD players, recorders, and theaters, digital

cameras, mobile phones, home communication products, and car AV and navigation systems

(83). Aside from those products, the company also offers a variety of other products including air

conditioners, refrigerators, washing machines, microwaves, vacuum cleaners, various kitchen

appliances, air purifiers, dehumidifiers, electric and ceiling fans, and power supply products (83).

Balance Sheet Discussion

Panasonic Corporation’s balance sheet has some interesting numbers that help to support

why the company is currently standing where it is in the marketplace. For fiscal year 2013, the

company had a total current asset value of 2.494 trillion yen. The current assets of the company

for fiscal 2013 cannot safely cover the current liabilities of the company which were

approximately 2.599 trillion yen. With that being said, Panasonic in fiscal 2013 would not have

been in a financially sound position if they had to convert their current assets to cash and pay off

their short term liabilities. This would have left them in a vulnerable position because there

would be no cash left after paying those off. With this being said, there is no safe way to say that

company could pay off the total liability amount of 4.093 trillion yen with their current asset

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amount of 2.494 trillion yen. The current assets would only be able to cover about 61.0% of the

total liabilities that were taken on by the company in fiscal 2013. Similar to LG Electronics, this

shows that the company would not be able to pay off all of their liabilities if something were to

happen.

Panasonic Corporation’s largest asset account on their balance sheet for fiscal year 2013

is their machinery and equipment account. This account had a total value of 2.723 trillion yen for

the fiscal year. Similar to Sharp Corporation and LG Electronics, this account has been the

largest asset account for the company for the past couple of years. Panasonic is an international

company like its competitors, so similar to the reasons given before, the company has invested in

a significant amount of equipment and machinery for production and manufacturing of their

products. This would be a contributor to why the amount for this account is so large. Panasonic’s

cash and cash equivalents account has significantly decreased over the course of the past three

fiscal years. For fiscal year 2011, the company’s cash account was 974 billion yen. For the most

recent fiscal year, 2013, the company’s cash account was only 496 billion yen. This is not a

positive thing for Panasonic by looking at the other values on their balance sheet. The cash

account that they are maintaining would not be able to pay off debts in certain situations if

necessary.

Income Statement Discussion

Panasonic Corporation’s net sales have decreased over the course of the past three fiscal

years. The company’s net sales in fiscal year 2011 were approximately 8.692 trillion yen. For

fiscal year 2013, the company’s net sales have fallen to 7.303 trillion yen. This is not a positive

sign for the company because it does not show that they are doing well with their overall sales

amount. Similar to LG Electronics, Panasonic’s cost of sales is high compared to their net sales

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amount each year. The gross profit each year has turned out to be low, leaving minimal room to

pay off expenses and fees before reaching a negative balance or amount. Panasonic’s has not

retained a net income since fiscal year 2011, when they had an income of 74 billion yen. The

company sustained net losses in both fiscal years 2012 and 2013. The net loss in fiscal 2013

amounted to negative 754 billion yen. By having significant net losses two years in a row,

Panasonic is not sitting in good financial positon compared to other companies in the industry.

Stock Discussion

Panasonic Corporation stock is traded on the Tokyo Stock Exchange and Nagoya

Securities Exchange (85). The company’s stock was listed on the Tokyo Stock Exchange

beginning in 1949, and then on the Nagoya Securities Exchange beginning in 1951 (85). The

closing price for Panasonic Corporation stock on December 1, 2014 was 1,550.0 yen. The 52

week high and low values show that the company has a stock price that has been increasing

steadily over the past few months, climbing to its high (85). Toward the beginning of the 52

week period, the company’s stock was similar to Sharp’s stock price staying relatively around

the same price (85).

Competitor #3: Samsung Electronics

Disclaimer: All Information used for this section was taken from the 2013 Annual Report for

Samsung Electronics. Please refer to this document for support.

Samsung Electronics engages in consumer electronics, information technology, mobile

communications, and device solutions businesses all over the world (86). The company offers a

variety of different consumer products including: mobile phones, tablets, televisions, Blu-rays,

DVD players, home theaters, Bluetooth speakers, cameras, camcorders, refrigerators, air

conditioners, washing machines, microwave ovens, ovens, dishwashers, tablet PCs, notebooks,

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chrome devices, monitors, optical disc drives, and laser printers (86). The company also provides

different healthcare products (86). Through their different innovative and reliable products, along

with talented people, and a responsible approach to business and global citizenship, Samsung is

taking the world and consumer electronics industry in imaginative new directions (87).

Balance Sheet Discussion

Samsung Electronics is one of the leading companies in the consumer electronics

industry. Their balance sheet helps to prove their position in the market. The company’s current

assets for fiscal year 2013 are equal to 110 trillion won. This amount of current assets easily

covers the company’s amount of current liabilities for fiscal year 2013 which amounted to 51

trillion won. This simply means that if something drastic were to happen, Samsung would be

able to quickly and easily convert their current assets into cash in order to cover their short-term

obligations and debts. The company’s current assets for 2013 are also able to cover the total

liabilities amount of 64 trillion won if necessary. This is great for Samsung because that means

that they could essentially pay off their debts and obligations, both short term and long term, if

need be with just their current assets. This is what companies strive to do, because it means that

they are in a strong financial position.

Samsung’s largest asset account is its property, plant, and equipment account. For fiscal

year 2013, this account amounted to approximately 75 trillion won. Similar to Sharp

Corporation, LG Electronics, and Panasonic Corporation, this account has been Samsung’s

largest asset account for the past three fiscal years. Like explained before, being a global

company, there is a lot of investment in property and equipment to keep operations going.

Therefore it makes sense for this account to be the largest asset account on their balance sheet

from year to year.

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Income Statement Discussion

Samsung Corporation’s statement of operations, or income statement, shows that the

company has been doing increasingly well over the past couple of fiscal years. Samsung’s

revenues have increased over the past three fiscal years. Fiscal year 2011 brought in revenues of

165 trillion won, while fiscal year 2013 brought in a revenue of 228 trillion won. This is positive

for Samsung because it means that the company is doing well and is making sales. Samsung’s

cost of sales is not as high when compared directly to the revenue. When looking at competitors,

the cost of sales typically brought the gross profit down to a minimal amount. In Samsung’s case,

the gross profit is relatively high which leaves room for expenses and allows for the possibility

of a net income to be made from year to year. In fact, Samsung has maintained a net income over

the past three fiscal years. Their net income has increased substantially since 2011. In fiscal year

2011, the net income for the year was 13 trillion won, where as in fiscal 2013, the net income

amounted to 30 trillion won. This shows positive earnings for the company and also shows that

Samsung is in a strong financial position.

Stock Discussion

Samsung Corporation stock is traded on the Korean Stock Exchange, similar to LG

Electronics. The closing price for Samsung Corporation stock was 1,295,000.00 won on

December 1, 2014 (88). Samsung stock had a 52 week high of 1,495,000.00 and 52 week low of

1,078,000.00. The 52 week graph and chart of Samsung Corporation stock shows that the stock

price stayed around the same price for the first couple months (89). However, over the last 6

months of the 52 week period there has been a steady decrease in the stock price (89). Only

recently has the stock price for Samsung Corporation started to climb back up (89).

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Competitor #4: Sony Corporation

Disclaimer: All Information used for this section was taken from the 2013 Annual Report for

Sony Corporation. Please refer to this document for support.

Sony Corporation is a consumer electronics company that is divided into seven segments

including: electronics, mobile, games, movie, music, network services, and financial services

(90). As a company, they have a mission to be a company that inspires and fulfills customer’s

curiosity (90). Sony is an international company that is a diversified global company at the

forefront of innovation and entertainment (91). The company has expanded into many regions

over since its start and is looking to continue that venture with everything that it has planned for

the future.

Balance Sheet Discussion

In terms of a balance sheet analysis, Sony Corporation is in a similar situation to

Panasonic Corporation. For fiscal year 2013, Sony had a total current asset value of 3.646 trillion

yen. The current assets of the company for fiscal 2013 cannot safely cover the current liabilities

of the company, which came out to be about 4.315 trillion yen. With that being said, Sony

Corporation in fiscal 2013 would not have been in a financially sound position if they had to

convert their current assets to cash and pay off their short term liabilities. This would have left

them in a vulnerable position. Further, the company could not pay off the total liability amount

of 11.522 trillion yen with their current asset amount. The current assets would only be able to

cover about 31.6% of the total liabilities that were taken on by the company in fiscal 2013.

Similar to LG Electronics and Panasonic Corporation, this shows that Sony would not be able to

pay off all of their liabilities if something drastic were to happen.

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Unlike all of its competitors up to this point, Sony Corporation’s largest asset account is

its securities investments and others account. This account for fiscal year 2013 has a total of

7.118 trillion yen. This has been the company’s largest asset account for the past three fiscal

years. The company has investments in a significant amount of securities and other investments

that are substantial to the company, as shown by the amount on the balance sheet compared to

other asset accounts. For fiscal year 2011, the company’s cash account was 1.014 trillion yen.

For the most recent fiscal year, 2013, the company’s cash account dropped to 826 billion yen.

This is not a positive thing for Sony Corporation by looking at the other values on their balance

sheet. The cash account that they are maintaining would not be able to pay off debts in certain

situations if necessary, which is similar to Panasonic.

Income Statement Discussion

Sony Corporation’s net sales have jumped around over the past three fiscal years. Fiscal

year 2011 had a net sales amount of 6.304 trillion yen. The net sales dropped to 5.526 trillion yen

in fiscal year 2012, but increased slightly to 5.691 trillion yen in fiscal year 2013. This shows

that the net sales of Sony are inconsistent and have no real pattern that they have been following.

However, the net sales amounts are significant enough that they offset the high cost of sales that

the company maintains from year to year. Fiscal year 2013 was the first year for the past couple

of years that Sony was able to sustain a net income after expenses were subtracted from the

revenues. Fiscal year 2011 and fiscal year 2012 both brought about significant net losses. Fiscal

year 2011 had a net loss of 220 billion yen, fiscal year 2012 had a net loss of 398 billion yen.

Sony Corporation was able to sustain a net income for fiscal year 2013 that amounted to

approximately 104 billion yen. By sustaining significant net losses two years in a row, Sony

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Corporation could be in financial trouble. However, by achieving a net income in fiscal 2013, the

company has something to work off of.

Stock Discussion

Sony Corporation stock is traded on the Tokyo Stock Exchange, similar to Panasonic

Corporation and Sharp Corporation. The closing price on December 1, 2014 for Sony

Corporation stock was 2,640.00 yen (92). The stock had a 52 week low price of 1,514.00 and a

52 week high of 2,683.00. The 52 week graph and chart of Sony Corporation stock shows that

the price of stock had no drastic changes in price over the past year. In fact, the price only began

rising to its 52 week high within the last month or two. Before that, the price moved at a steady

pace and stayed around the same price never changing too much.

Financial Position Comparison of Competitors Using Ratio Analysis

Disclaimer: All Information used for this section was taken from the 2013 Annual Reports for

Sharp Corporation, Sony Corporation, Samsung Electronics, and Panasonic Corporation.

Information was also taken from LG Electronics 2012 Annual Report and 2013 Consolidated

Financial Statements. Please refer to these documents for support.

A comparison of Sharp Corporation and its key competitors can be done using different

financial ratios. These different financial ratios can be used to see where each company stands in

regards to one another and how each one then stands overall in the industry. Financial ratios can

help companies understand not only where they stand next to their competitors, but what they

should improve on in order to be successful in an industry. To compare Sharp Corporation and

its four key competitors, six financial ratios can be used. These six ratios include the current

ratio, the acid-test ratio, the debt to equity ratio, the debt to assets ratio, the asset turnover ratio,

and the profit margin ratio.

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Current Ratio Comparison

As discussed in Sharp Corporation’s financial discussion, the current ratio of a company

measures a company’s ability to pay its short term obligations and debts. The equation used is,

current assets / current liabilities.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Current Ratio – Fiscal Year 2013

0.89 1.16 0.96 2.25 0.85

Samsung Electronics has the strongest current ratio and is in the best position to pay off their

short term obligations with their present current assets. LG Electronics is in a good position

because they are sitting at a ratio above one. Sharp Corporation, Panasonic Corporation, and

Sony Corporation all have current ratios under one which is unhealthy because that means that

none of them would be able to pay off their obligations with their current assets. Sony

Corporation is in the worst position with an 0.85 current ratio, which means that they would only

be able to pay 0.85 of their current liabilities with their current assets if it came down to it.

Acid-Test Ratio

The acid-test ratio is similar to the current ratio, but it only accounts for specific current

assets as discussed in Sharp’s previous financial discussion. The equation for the acid-test ratio is

as follows: (Cash + Accounts Receivable + Short Term Investments) / Current Liabilities.

Essentially, the acid-test ratio will tell a company whether it has enough short term assets to

cover its immediate liabilities without selling off inventory.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Acid-Test Ratio – Fiscal Year 2013

0.61 0.69 0.55 1.58 0.57

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The only company that is in a good position from looking at this ratio is Samsung Electronics.

Ideally, companies want to have an acid-ratio that is greater than one because that means that

they are in a place to pay their current liabilities with specific current assets. Sharp, LG,

Panasonic, and Sony are all significantly under one, so they will be looked at with caution when

it comes to this ratio. However, they are all close to one another so they are in similar situations

when it comes to this ratio and paying off current liabilities when inventories are not included.

Debt to Equity Ratio

This ratio compares a company’s total liabilities to its total shareholders’ equity. The

equation used for this ratio is total liabilities / net assets. The result is a ratio that measures how

much suppliers, lenders, and creditors have committed to the company versus what the

shareholders have committed to the company.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Debt to Equity Ratio – Fiscal Year 2013

953% 72.59% 87.67% 4.95% 44.1%

Companies want this percentage to be lower because that means that their company would be

using less leverage and would therefore have a stronger equity position. With that being said,

Samsung Electronics is in the best position according to this ratio because they are at 4.95%.

Sony Corporation is not doing too poorly as compared to the others. Panasonic and LG are close

to each other. Sharp Corporation has a high debt to equity ratio for reason discussed in their

financial analysis. They are not doing well when compared to the rest of the industry and to their

key competitors.

Debt to Assets Ratio

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The debt to assets ratio is another leverage ratio but this one measures how much of a

company’s assets are being financed with debt. Similar to the debt to equity ratio, companies

want this ratio to be lower because then they have a better chance at paying back their debts. The

equation used to find this ratio is simply total liabilities / total assets.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Debt to Assets Ratio – Fiscal Year 2013

90.50% 25.93% 21.18% 3.47% 8.30%

Similar to the debt to equity ratio, Samsung has the lowest debt to assets ratio which means that

they are in the best position. Sony follows behind them, with LG and Panasonic in a similar

situation. Sharp Corporation has the highest and worst debt to assets ratio because they have

taken on such a large amount of short term and long term debt that they cannot balance it out

with the assets they maintain.

Asset Turnover Ratio

The asset turnover ratio shows the amount of sales or revenues a company generates per

dollar of assets. The equation to get this ratio is sales / total assets. A higher value for this ratio is

what companies strive for because that means that the company is generating more revenues per

dollar of assets – which is what management and companies want.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Asset Turnover Ratio – Fiscal Year 2013

1.16 1.65 1.22 1.16 0.50

LG Electronics has the advantage when it comes to this ratio in the industry. Panasonic,

Samsung, and Sharp are all in the middle with similar ratios which indicates that they are all

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pulling out similar results in regards to this ratio. Sony is struggling according to this ratio. They

are significantly lower than the rest of their key competitors which indicates that their sales are

not high when compared to their total assets.

Profit Margin Ratio

Calculated as net income / sales, the profit margin is a profitability ratio that measures

how much of every dollar of sales that a company is actually keeping in earnings. A higher profit

margin is typically favored because it indicates a more profitable company that has better control

over its costs. This ratio is a key financial ratio when comparing companies across an industry,

such as the consumer electronics industry.

Sharp Corporation

LG Electronics

Panasonic Corporation

Samsung Electronics

Sony Corporation

Profit Margin Ratio – Fiscal Year 2013

0.39% 0.91% -10.33% 11.76% 0.63%

Samsung Corporation is in the best financial position when comparing profit margin because

they have the highest one. LG, Sony, and Sharp Corporation are all between 0.00% and 1.00%,

which indicates that they are performing similar in regards to this ratio. Panasonic is the only

company that ended up with a negative profit margin. This is because they sustained a net loss in

fiscal year 2013, so they are going to have a negative profit margin.

Conclusion

Samsung Electronics has the strongest ratios in every category with the exception of one,

which was the asset turnover ratio. Therefore out of Sharp Corporation’s key competitors,

Samsung is leading in the industry in terms of their financials and what they are doing. Both

Sharp Corporation and Sony Corporation did not fare well in multiple ratio analysis. This

indicates that the companies are having trouble with their financials and sustaining positive

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outcomes. They are on the lower end of the industry and not leading it by any means. LG

Electronics and Panasonic Corporation averaged middle of the pack ratios. Neither company was

a standout like Samsung, but neither remained consistently at the bottom either. This indicates

that these two companies are doing fairly well with their performances but some of their

individual ratios indicate that there are areas for improvement. The consumer electronics

industry is a competitive industry and Samsung Electronics has done what has needed to in order

to gain the advantage in the industry above its key competitors including: Sharp Corporation, LG

Electronics, Panasonic Corporation, and Sony Corporation.

B. Relevant Information Regarding Current Marketing Strategy of Key Competitors

When discussing Samsung Electronics, LG Electronics, Sony Corporation and Panasonic

Corporation as competitors to Sharp Corporation, it is important to dissect the competition’s

marketing mix. The marketing mix consists of four main components – product, price, place, and

promotion. In looking at these factors, a company can stay competitive within the industry and

keep an eye on what other players are doing within the industries it does business in. Thus, in

this section we will be discussing the marketing mix of Sharp’s key competitors: Samsung

Electronics, LG Electronics, Sony Corporation, and Panasonic Corporation.

Competitor #1 - LG Electronics

LG Electronics, as a competitor to Sharp Corporation, should be analyzed according to its

marketing mix. The marketing mix consists of four main components – product, price, place, and

promotion. In looking at these factors a company can stay competitive within the industry and

keep an eye on what other players are doing within the industries it does business in. Thus, in

this section we will be discussing the marketing mix of LG Electronics.

Products:

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LG Corporation as a whole is made up of three main areas – Chemicals, Telecom &

Services, and Electronics (PDF4). The Chemicals field consists of LG Chem and LG Household

& Health Care, the Telecom & Services division is comprised of LG U+ and LG CNS, and the

Electronics unit consists of LG Electronics and LG Display (PDF4). The most important

business unit to focus on is the LG Electronics segment, which is comprised of five main

business units. These business units consist of Home Entertainment, Mobile Communications,

Home Appliance, Air Conditioning and Energy Solutions, and Vehicle components (93). All of

these are consumer electronic products and have main products within each business division

that serve different consumer needs. As for the Home Entertainment unit, some of the main

products that are offered include televisions, audio and video, monitors, PCs and accessories, and

commercial products (93). Within the Mobile Communications segment, the company has its G

series, Vu: Series, F Series, and L Series II (93). LG’s home appliances have product offers such

as refrigerators, washing machines, stylers, cooking and cleaning devices, and built-in appliances

for consumers’ homes (93). As for the Air Conditioning and Energy Solutions business segment,

the main products are residential air conditioners, system air conditioners, lighting, and building

management systems (93). Lastly, the Vehicle Components unit consists of in-vehicle

infotainment, HVAC and motor, and vehicle engineering (93). This is just a broad sense of the

product in which LG Electronics puts out on the market for consumers.

To get a better sense of what each electronics unit offers, more detail should be discussed

about the products that exist within them, starting with the Home Entertainment division. The

company as an array of televisions in its product line, which consists of LED, OLED, LCD,

Plasma, UHD, Smart, and 3D (95). LG’s LED TVs are the slimmest in its product line that

delivers vivid colors with a “brighter, smoother, clearer” picture for viewers (95). The

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company’s OLED TVs are intended to give consumers “richer, more saturated, life-like colors”

and are energy efficient (95). The LCD TVs are described on the company’s website as

lightweight and are the perfect match for bright rooms (95). LG’s plasma TVs compliment high-

motion pictures, which makes the TV model good for watching sports, actions films, and playing

video games (95). The UHD product line delivers twice the resolution of an HD TV and

produces a crisp and vivid picture that consumers will feel as if they are right in the middle of the

movie, so LG says (95). The company’s smart TVs provide consumers with limitless options for

entertainment from movies to TV shows to games to videos and also TV applications (95). In

regards to LG’s 3D TVs, this television product line gives consumers an immersive 3D

experience whether they are watching an action flick, a major playoff game, or even a comedy

on TV (95). Within the Home Entertainment section there is also audio and video technologies

offered that consist of home theater systems, sounds bars, and SoundPlates™ (96). LG’s home

theater systems have a range of features that consumers can take advantage of, such as Blu-ray,

IPod and IPhone compatibility, AM/FM tuner, Upscale Standard DVDs (which allows

consumers to watch standard DVDs with high picture quality), and Silk Dome Speaker

Technology (96). The company’s sound bar and SoundPlates™ also contain many features like

wireless technology that allows consumers to choose where they want to place their speakers in a

certain space, Bluetooth streaming that allows consumers to hook up a variety of portable

devices, wireless subwoofer that gives off a deep base and can be placed in any location, LG

sound gallery that provides consumers with seven different sound genres to create the perfect

acoustic experience, a slim design that makes mounting a jiff, built-in lock feature that can easily

connect to any TV so consumers can experience surround sounds, and lastly 3D sound processor

that gives consumers a “full, immersive sound” when watching their favorite 3D entertainment

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(97). The next category with Home Entertainment deals with monitors, PCs, and accessories.

The company’s monitors consist of 21:9 UltraWide Monitors, Gaming Monitors, IPS (In-Place

Switching) Monitors, LED Monitors, as well as 3D Monitors (98). These different models are

intended to meet the needs of various consumers. LG even pairs up with ENERGY STAR® to

offer more energy efficient products to reduce the amount of energy consumed when people use

its products day in and day out (6). Some of the accessories that the company offers for its

monitors and PCs are Blu-ray burners and drives, Blu-ray combo burner and drives, and also

DVD burners and drives (99). LG also offers a fascinating mouse that encompasses the

capabilities of a mouse and a scanner all in one (100). Lastly, within LG’s Homes Entertainment

business segment, the company offers commercial products. In being more specific these

commercial products include digital signage displays, smart hotel TVs, and security cameras &

digital video recorders that are to be purchased and used by other businesses (LPDF4).

The next division to look at is LG’s Mobile Communications. This business unit is made

up of cell phones, tablets, smart watches, as well as Bluetooth & mobile accessories. The

company has cell phones ranging from flip phones to slider phones to touchscreen phones to

smartphone, all of which are design to fit different consumers’ lifestyles (101). There are several

different carriers that LG phones can be purchased from including AT&T, Sprint, Verizon, T-

Mobile, and others (9). There are also different series as mentioned earlier. The G Series is made

up models known as G2, G3, G3 Beat, G Flex, G Pro, G Pro 2, G2 Mini and the G Pad (PDF4).

Each of these models possesses different features that separate on device from another. For

instance, the G Flex looks as if the phone can bend and has a natural curve to the design, whereas

the G2 Pro emphasizes a bigger so that consumer can enjoy more with a compact device (PDF4).

There is also the F Series of smartphones and the L Series of smartphones (PDF4). There is also

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the wearables product line that offers the company’s LifeBand Touch and LG G watch (PDF4).

Both of these technologies show how LG has jump on the bandwagon for these types of products

that other companies within the industry are delivering, such as Sony and Samsung. Furthermore,

LG’s Home Appliances unit offers products that serve home areas ranging from the kitchen, to

the laundry room, to the family room, and more.

Price

LG is debatably one of the market leaders in the consumer electronics industry meaning

the company can charge a slightly higher price than competitors, and consumers will still pay the

higher price because the consumers know they will be receiving a quality product. To price their

products, LG Electronics uses competitive pricing. When LG is setting the price of a product it

is based upon what the competitor is charging for a similar product. Also, when considering

pricing a new product LG has to take into considerations of how many substitutes are available

for that product. If the company sets the price too high consumers will choose a cheaper

substitute and maybe settle for lesser quality rather than pay more. When setting the price of a

product, LG has three options to consider. They can set the price below competition, at the

competition price, or above the competition price (106). In order to charge a price above the

competition the company must create an environment that warrants the premium, such as

payment terms or extra features (106). Setting the price below the competitors can cause for

potential loss, but if the company believes that enough consumers will purchase the product to

still make a profit, then there may be an advantage there (106).

Place

LG Electronics has head offices located in six of the major regions around the world:

Europe, Middle East and Africa, Russia and CIS, Asia and Oceania, North America, and South

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and Central America. Within these regions, the company has 114 subsidiaries worldwide (104).

When LG was first getting started, the company targeted upscale retail stores like P.C Richard to

sell their products (102). The company did this to prove to the consumers that the product they

were producing was of high quality. However, now the company has made it products available

to retailers like K-Mart, Wal-Mart, and Sam’s Club because the company has proven to the

consumer that they do in fact make a high quality product. LG has accumulated many partners

who help distribute their product around the world. Distribution partners for LG inlcude: Clear

Sight & Sound, Sears Commercial, APEX Procurement, MDM lodging, Global Motel Supplies,

Direct Hotel, Flagstaff, Hospitality LCD, IE, PTAC Direct Sales, 4A World Commercial, TR,

KniTec, Synnex Corporation, dts, Tech Data, Ingram Micro, CDW, LeaderTech, ASI, Fagan,

D&H, MA Labs, HD Distributing, International Audio Visual Inc., Private Label PC, Stirling

Communication Supply Co.,Ltd, ALMO Professional AV, TXL Distribution, Stampede, Digital

Data, Capitol Sales Service Solution, and USEI Electronic Inc. (105). These distributors are

broken down into five different kinds of distribution partners: hospitality, healthcare, channel,

specialty (healthcare), and specialty (video wall) (105). LG does some unique things with their

distribution companies. For most of their distribution partnerships, LG Electronics is not selling

to the businesses themselves, but are selling their products through their distributors. For

example when LG is supplying a hotel with a product, LG doesn’t deal with the hotel directly,

LG deals with supplier who supplies those hotels with products.

Promotion

LG Electronics is a brilliant company when it comes to marketing their products. In som

cases, consumers may not even know they are being exposed to the company’s promotional

tactics. It all starts with company’s logo and slogan. With the company’s slogan being “Life’s

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Good” and company logo being the letters “L” and “G” encompassed to resemble a “Cheery

Face”, the slogan practically draws customers in. The “LG Electronics brand slogan conveys a

message that LGE enriches customers’ lives with its products, services and technology, and

creates a unique brand identity of the company” (103). LG has gotten much recognition through

sponsorships of sports and through endorsing celebrities. LG sponsors the highly rated NCAA

college basketball tournament (102). The company teamed up with Oprah Winfrey to give away

350 “refrigerators of the future” and high definition TVs to her audience during one of her shows

(102). LG also placed its televisions in hotels, motels and airports for consumers to experience

their products without actually buying it; it’s like getting a free trial. By the consumer using the

TV, LG hopes the consumer has a good experience, and will persuade or make them want to go

and buy one upon returning from their trip.

Competitor #2 – Panasonic Corporation

Product:

Panasonic Corporation is one of Sharp Corporation’s more relatable competitors, due to

the fact they both have similar product lines and are in the same financial position in the

consumer electronics industry. Both companies are not market leaders, but they are not far

behind. With that being said, neither company is at the bottom of the market either. If both

companies were to be put in a class they would be in the upper middle class. Panasonic has a

variety of products that compete with Sharp, and these products are broken into divisions. The

first division is TVs and projectors, the second is players and recorders, the third is audio, the

fourth is imaging, the fifth is household, the sixth is air conditioners, the seventh is power tools,

and the final division is solar, lighting and batteries (107). Panasonic has their TV division

separated in two categories: LED/LCD TVs and Plasma TVs. The LED/ LCD TV is available in

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three different models: the 4K Ultra HD, FHD and HD (108). The 4K Ultra HD TV is

Panasonic’s newest and top-of-the-line TV. The 4K comes with features such as Studio Master

Drive, Local Dimming Ultra and 4K Fine Remaster Engine (108). With the Studio Master Drive

feature the consumer will experience more accurate color and smoother gradation. This feature

achieves highly detailed black expression even in very dark scenes (108). The 4K fine Remaster

Engine 2 feature allows the TV to be viewed in 3D, connect wirelessly to the internet, and have

twin HD tuner capabilities to name a few (108). The FHD model offers excellent picture quality,

a stylish design, and superb versatility (109). The FHD has a Life Screen feature where the

consumer can design a home screen with their favorite channels, apps, websites, etc. all located

on this screen (109). The second division, player and recorders, includes recorders, players, and

accessories for the two items just listed. The third division is audio, which includes products

such as: Hi-Fi, home theater, sound bar, headphones, clock radio, portable AM/FM radio, and

portable CD radio cassette player (109). The fourth division is imaging which consists of: lumix

cameras, camera, accessories, lumix G cameras, lumix G lenses, camcorders, camcorder

accessories, and SD cards. The fifth division household includes items like: refrigerators,

washing machines, dryers, microwave ovens, small appliances, grooming, and cordless phones

(109). The sixth division is air conditioners, which includes: ECONAVI reverse-cycle inverter,

cooling only inverter, standard reverse-cycle inverter, inverted ducted, and inverter cassette

(109). The seventh division is power tools and includes these products: single tools (drills),

combo kits, flashlights, and accessories (109). The final division is solar, lighting, and batteries,

this division includes the following products: household batteries, LED lighting and solar panels

(109). Sharp Corporation and Panasonic Corporation are directly competing with one another

when it comes to these products: TVs, blue-ray players, household appliances, air conditioners,

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and solar panels. Although, Sharp is much more advanced in the solar industry than Panasonic,

however Panasonic is still considered a rival because the company could still steal customers at

the lower residential market from Sharp.

Price

Panasonic is a company a lot like Sharp where they don’t spend very much money on

marketing, therefor making their pricing strategy economy pricing. Economy pricing is when the

costs of marketing and promoting a product are kept to a minimum (110). The company is

already trying to cut costs in other areas and not even trying to budget marketing products into

their budget, they just want keep the marketing sections as it is. The company wants to roll out

newer models, which will cut down the entry-level price of other products like home theater and

digital camera (111). "The price is also brought down by shedding unnecessary product features

which may not be required in the smaller towns. Such cost benefits are directly passed on to the

consumer," said Mr. Sharma. The company is removing unnecessary features from it products to

cut down production costs. For example the company reduced the number of HDMI ports on its

32-inch LCD TV from four down to one (111). From this example the company is really trying

to cut costs and does not have an abundant amount of money to spend marketing new products.

Place

Panasonic uses a distributor to distribute their products around the world. The company

that distributes their products for them is called TTI Inc. (112). This company is Panasonic’ s

premier authorized distributor. TTI Inc. is responsible for distributing all Panasonic products to

all of its retailers. These retailers include companies such as Best Buy, HH Gregg, and many

other electronic stores worldwide.

Promotion

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Panasonic keeps it old school when it comes to having promotions for their products; the

company primarily only offers coupons and deals online at various websites. Some of these

coupons and deals will include incentives to encourage you to buy their product such as free gift.

For example this coupon states, “Extra $24 off 4-Blade Wet/Dry Shaver + Free Case” (113). The

company also promotes deals on products like their TVs, like this one which states, “This

Panasonic 40” 120Hz Smart TV drops from $529.99 to $349.99, with free at Panasonic” (113).

In both of these promotions, the company is willing to give the consumer something free if they

are willing to help encourage others to buy their product. Panasonic biggest promotion is that

the company is the official of FCB (Football Club of Barcelona) (114). Through this promotion

Panasonic puts an emphasis on how well the picture of the game being played is portrayed on

their television screen. “Our LED TVs feature super-high-speed scanning and backlight blinking

technology to ensure liguid-smooth reproduction of fast-moving action, easily keeping pace with

the fastest and most skilled on the FC Barcelona side” (114). Panasonic uses technologies in their

TVs to make the consumer feel like they are sitting right there in the stands watching the game.

This not only through visual but sound as well.

Competitor #3 - Samsung Electronics

Products

Samsung Electronics is the industry market leader and with being in that position, a

company must have many products to offer. The company must not only offer them, but produce

quality products that function properly, are dependable and that are durable. Samsung

Electronics competes with many of Sharp Corporation’s products, but Samsung has more to

offer. Samsung’s product line includes cell phones, TVs, tablets, wearable tech, blue-ray and

smart players, home theater and audio, digital camcorders and cameras, computing, memory and

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storage, home appliances, LED lighting, security and monitoring, and accessories (115).

Samsung Electronics and Sharp Corporation compete with one another at the same level with

many of the products that they offer. Both companies offer TV, blue-ray disc players, home

theater, LED lighting, home appliances, and cell phones. The two highest competing products of

these two companies are their cellular phones and their TVs.

Samsung offers two different models of cellular mobile phones, which are the Galaxy S

and the Galaxy note (116). Samsung’s newest available phone is the Galaxy S5 series. The

Galaxy S cell phone is available in two models: the Samsung Galaxy S5 Sport and the Galaxy

S5. The Galaxy S5 is available in four different color options: blue, black white or yellow (117).

While the Galaxy S5 is only available in two color options, those being red and blue (117). Both

cell phones possess 5.1-inch full HD Super AMOLED displays, 16-megapoxel cameras, heart

rate monitor, and finger print access scanners features (117). The difference between the Galaxy

5S and the Galaxy 5S sport is that the sport model is water and dust resistant, contains work on

your fitness goals capabilities through S Health and Activity Zone technology, immersive 5.1-

inch HD display for incredible detail and rich color, and fast action 16MP camera with Pro

Editing Tools (117). The Galaxy Note is basically the same at the Galaxy S series phones only a

bigger. The Samsung Galaxy Note comes in either black or white. The Note possesses features

such as: innovative smart edge screen, 5.6-inch Quad HD super AMOLED display, Enhanced S

Pen with more precision and functions, and 16 MP rear camera with optical image stabilization

(118). All of Samsung’s cellular phones are available through AT&T, Verizon Wireless, Sprint,

and T-Mobile service providers (115).

Samsung has a full line of TVs in which they offer that are divided into four categories;

the first TV being their top of the Line 4K UHD TV. The 4K UHD TV consists of the most up to

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date technologies available for televisions. The 4K UHD is unique because the screen is not

actually flat; it is slightly bent into a “U” shape. This curved screen crates a wider field of view,

which makes the image seem bigger, the screen feels cinematic, and the experience feels larger

than life (119). The 4K offers four times the resolution of full HD, colors are pure, motion is

fluid and every image is simply stunning (119). All Samsung UHD 4K TVs are Smart TVs.

Which means you get access to streaming content, games, apps, social, multimedia, Internet and

more right from your TV. Also since TV technology is constantly evolving, the company

equipped the TV with Samsung Evolutionary TV, which allows the consumer to update the TV’s

Smart Hardware and software to keep up to date with the latest technologies (119). The second

TV Samsung offers is the OLED TV. The OLED TV screen consists of thousands of organic

LED pixels that display richer and brighter images compared to the company’s competitor’s

LED TVs (120). The OLED TV is also a curved design like the 4K, but also has another very

nice feature the 4K does not posses. This feature being that the TV has a floating canvas frame,

as if it looks like a painting hanging on a wall (120). The OLED TV looks good when it is turned

on or even when it is turned off. The most impressive feature this TV possesses is the multi view

feature. This feature allows two people to simultaneously watch two different full-screen

program by just simply putting on special eye wear (120). The next TV model offered is

Samsung’s LED TV which includes features such as: curved panel screen, auto depth enhancer,

precision black local dimming, and ultra clear panel (121). The Last TV Samsung has available

is their plasma TV. The plasma TV has Smart TV capabilities includes features such as super

contrast panel, S-recommendation, Smart interaction, real black pro filter, smart evolution, quad

core processor, and 600Hz subfield motion (122).

Price

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Samsung Electronics uses two different types of pricing strategies: skimming price and

competitive pricing (123). Each pricing strategy is used for different products offered by the

company. Samsung uses price skimming for its smart due the fact that they are the market leader

for the products (123). Price skimming is when a company charges a higher price for a product

because it has a sustainable competitive advantage over its competitors (73). A downfall to

having this high of a price for a product is that it attracts new competitors to the market and the

price of the product will eventually decrease (73). When Samsung first releases new smart pone

the company charges a high value for that product before its competitors catch and release their

own similar product (123). Once the product is out dated or a competitor has launches a similar

product, Samsung immediately drops the price of the product (123). The other pricing strategy

that Samsung uses is competitive pricing which is used for products other than smart phones.

Competitive pricing is when a company sets the price of a product based upon what their

competition is charging (124). Competitive pricing is used mostly when products on the market

are very similar and little substitutes are offered (124). These other products include televisions,

air conditioners, refrigerators, and other competitive products offered by Samsung (123).

Samsung simply uses competitive pricing to beat the competitors.

Place

Samsung produces many different products and to distribute all these products the

company relies on several distributers to deliver its products around the globe. The company

focuses on three main segments that originate from the channel marketing concept. The three

main segments the company uses are: sales and service dealers, modern retail, and distributers

(124). The main job of the sales and service dealers segment are to handle accounts for Samsung

and are involved in corporate sales (124). The modern retail segments are responsible for the

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company’s current retailers. These retailers include: Croma, Hypercity, Vijay sales, and any

other retailers who are present in the modern electronic retail chain (124). The distribution

segment of the three segments is probably the most key and vital of the segments. The

distribution segment has to deal the actual distribution of the products to the retailers. Samsung

has come up with a pretty interesting way of doing so. The company has one distributer for a

large region, but that distributor has a large amount invested in Samsung as well. Meaning that if

the distributors distribute Samsung’ s products the right retailers who will sell the most, both

companies will benefit from this happening. “For example – In Mumbai, Samsung has SSK

distributors who are distributors for all Samsung products. This distributor has a huge investment

in Samsung and both, the distributor and the company, go hand in hand for the sale of Samsung’s

products. Thus all material of Samsung will be sold to a single distributor who in turn will sell it

forward to retailers (124)”.

Promotions

Samsung like every one of the company’s competitors uses many forms of promotions to

help convince the consumer that their product is better than their competitors and use things to

relate to the consumers to help them be persuaded to buy their product the rivals. Samsung uses

many forms of promotion to try and convince consumers to their products, this includes:

advertising, the use of marketing vehicles during certain times of the year, special offers and

discounts, and the company’s pull strategy (124). Samsung uses advertising to pull the customers

to their products but also simultaneously push the product the customers through sales and

promotions (124). Also throughout the year, Samsung will have marketing vehicles doing

promotions during festive and non-festive times of the year. Samsung will also give special

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offers and discounts to its trade partners to help motivate and influence them to sell Samsung

products over the competitors (124).

Competitor #4 - Sony Corporation

Product

Sony Corporation competes for the same consumers as Sharp Corporation due to the

many products that they both produce. The company produces products that directly compete

with Sharp products. Sony produces many products, which are broken down into categories.

Products that Sony produces that directly compete with Sharp’s products are digital imaging

products, professional solutions, game, mobile products and communications, home and

entertainment sound, devices, pictures, music, and financial services (125). The digital imaging

category includes products such as: digital cameras, video cameras and interchangeable single-

lens cameras. The second category, professional solutions, includes broadcast-and professional-

use products (125). The next category, game, is responsible for producing, marketing, and

distributing of the PlayStation gaming console, PlayStation Vita, PlayStationPortable and their

hardware and any other related packaging software to go along with them. Sony’s mobile

communications category includes personal and mobile products (125). The home entertainment

and sound category includes products such as TVs and audio and video. Audio and video being

products such as home audio, blue-ray disc players/recorders, and memory based portable audio

devices (125). In the devices category, one will find products, which include semiconductors and

components. Semiconductors include CMOS image sensors, CCDs, system LSIs, small- and

medium-sized LCD panels and other semiconductors. Components include batteries,

audio/video/data recording media, storage media, optical pick ups, chemical products, and

optical disk drivers. Chemical products include materials and components for electric devices

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such as anisotropic conductive films (125). The next category pictures, has to deal with the

global operations of Sony’s motion picture productions, acquisition, and distribution. Sony

possesses four motion picture production companies including Columbia Pictures, Tristar

Pictures, Screen Gems and Sony Pictures Classics (125). This category also includes Sony

Picture Television, which develops and produces television programs to approximately 75

countries with 120 channel feeds (125). The next category is music, which includes Sony’s four

music publishing businesses. These business are primarily involved in the development,

production, and distribution of recorded music (125). The final category is financial services. In

2004 Sony established a wholly owned subsidiary. The financial subsidiary having three

departments, which are Sony Life, Sony Assurance, and Sony Bank are offering services

including insurance and savings and loans, and offering customers valued products and services

(125). Products of Sharp and Sony that would directly compete with another would be TVs,

blue-ray disc recorders/players, home theater, and mobile phones.

Sony Corporation has two TV models available on the market right now. The first being

their 4K Ultra HD TV: XBR series. Which according to Sony is their “top-of-the-line TV for

premium quality and elegance”. The 4K Ultra HD has four times the clarity of full HD 1080p

(126). The TV also contains features such as X-tended dynamic range with up to three times

brightness range, more brilliant color the ever with TRILUMINOS display, and the latest HDMI

support for next generation 4K players and services (126). The other TV model offered is Sony’s

full HDTVs: W & R series. According to Sony their HDTVs, “full brightness and clarity for

every room in your home.” So no matter which room the customer decides to place their TV in,

the color or darkness or brightness of the room will have no effect on the image portrayed on the

screen (126). Sony’s HDTV contains features such as color clarity and detail to the best X-

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Reality Pro, loud clear surround sound and dialogue with Clear Audio+, stream HD

entertainment wirelessly with built in Wi-Fi, and TRILUMINOS picture display for more

brilliant colors available (126).

Sony Corporation also produces mobile devices that compete for the same market as

Sharp. Sony currently offers one smart phone line, which is the Xperia, but the Xperia is

available in a variety of different models. Sony’s full line of Xperia cellular phones includes the

following models: Z3 LTE, Z3 Compact, Z2, T3, M dual, M2, M2 LTE, Z Ultra LTE, Z Ultra, Z

LTE, Z1 compact and the Z1 LTE (3) The two latest mobile phones to the market are the Sony

Xperia Z3 LTE and Xperia Z3 Compact. The Xperia Z3, which is available in two models the Z3

LTE and Z3 Compact (127). The Z3 phones are both very similar, both include the following

features: contain the highest waterproof rating, up to two days battery life for long lasting

performance, steady shot technology with Intelligent Active Mode, and audio feature which

include, S-Force Front Surround, Hi-Res support, DSEE HX (127). The only real notable

difference between the two phones is there size. The Z3 LTE possesses a display screen size at

5.2-inches while the Z3 Compact has a 4.6-inch display screen. All Sony phones are available for

purchased unlocked, meaning the consumer can choose the service provider for the phone. The

only downfall to this is that the phones are only compatible with two of the major service

providers: AT&T and T-Mobile. One of the best features Sony’s mobile phones have is they are

programmed by Android Technology.

Price

In this section of the marketing mix the pricing strategy used by Sony Corporation will be

covered. Sony has been trying to differentiate their products from the saturated market of

consumer electronics for the past few years now. Also, the company’s originally projected sales

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on most products aren’t as high as they had hoped. In an effort to fix these problems, Sony took a

risk and attempted to use unilateral pricing as a pricing strategy. By taking this route it should

help the company boost its profits. By choosing this route would mean fixing products prices all

across the board. Unilateral pricing is when the manufacturer of the products lets the retailers

know that products prices can’t be priced lower than a minimum price, which is set by the

manufacturer (128). Through this pricing strategy Sony actually raised the prices of their

products, which in turn may make their products harder for retailers to sell. But Sony has already

thought of this to ease higher prices. Sony has told retailers to make sure all of their products are

being shown are in working order. The company has also set out to train their retailers’

employees to enlighten them on the Sony products and to make sure the employees know

everything there is to know about the products they are selling (128). Another reason Sony

choosing unilateral pricing is risky move is because consumers love the idea of bargaining and

with set price set by Sony the consumer loses that ability to bargain with retailers on the price.

Take shopping on the internet foe example, consumers have to ability to snag much better deals

online than they do in store, this is one of the main reasons why Amazon does so well. So by

Sony choosing unilateral pricing, this may put an end to finding cheap deals on their products

online (128). In return Sony will mostly likely end up losing business because consumers will

not want to pay for their high prices when they can purchase a competitor’s product, which may

even be better, at bargain price.

Place

Sony Corporation distributes its products around the world through partnerships with

retail stores like Best Buy and Wal-Mart that utilize in store strategies. Sony also sells its

products through their own brand stores located around the world. For the United States, it may

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not be like that for very much longer. Since Sony products in the in the United States are

available through retailers like Best Buy and Amazon, the company has decided to do away with

20 of its 31 Sony stores by the end of 2014, which only leaves eleven stores total across the

United States. (129).

Promotion

Sony sponsors one of the most watched sporting events, which airs every four years: The

World FIFA (Federation International de Football Association) Cup Championships. Sony is

only one of six official FIFA partners, which is the organization’s highest status (130). This

exclusive partnership gives Sony preferred marketing, advertising and promotional rights to all

FIFA competitions (130). This promotion is exposed to billions of people around the world who

through watching this tournament are exposed to the Sony name. A key component to this

partnership is that it allows the two organizations, FIFA and Sony, to globally associate with the

emotion and excitement of football (130) (or soccer in the U.S.).

C. Relevant Information Regarding Current Corporate Structure, Leadership Transitions,

or Management Team of Key Competitors

Competitor #1 – LG Electronics

LG Electronics removed the Circulating Investment Structure of its affiliated companies

by launching a holding company system; this enabled the holding company to take full charge of

investments. They now have been able to focus on their own businesses while increasing the

overall value of the Company. This corporate governance structure has laid the groundwork for

increasing managerial transparency, through a responsible management system comprising of the

CEO of LG Electronics and a Board of Directors (131). They are making big steps in

strengthening their competitiveness at both their domestic and international level, in order to

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maximize their corporate and shareholder value. Their Board of Directors maintains

independence from its management and major shareholders. It is comprised of seven directors;

four of the seven are outside directors (131). The Board of Directors is supported by three Board

Committees, which are the Audit Committee, the Outside Director Candidate Recommendation

Committee and the Management Committee (131). The Audit Committee consists of three

Outside Directors, and is responsible for examining corporate financial records and accounting to

ensure compliance with the accounting laws and transparency. The Management Committee

reviews and determines the agendas delegated by the Board of Directors and ordinary

management activities (131). Top management and executives are evaluated to determine

whether they have set and achieved challenging goals, whether their job objectives composed of

quantitative and non-quantitative factors were achieved, also their capability through fair and

objective process, and appropriate compensation corresponding to the outcome of the evaluation

is determined (131).

Bon-joon Koo is the Vice Chairman of LG Electronics, Representative Director/ CEO

and Inside Director since 2010 (132). He is the grandson of In-hwoi Koo, the founder of the LG

Group. Before he was appointed to Vice Chairman of LG Electronics he served as the Vice

Chairman and CEO of LG International (132). From 1999 to 2006, Koo created and led the joint

venture LG. Philips LCD, which became LG Display in 2008. He set the stage for LG Display to

become the leading global LCD manufacturer that it is today (132).

LG Electronics has their own way of managing with their “Jeong-do Management” which

embodies their high ethical standards and doing business in a transparent and honest manner

(133). They started with their customer-value creation and people-oriented management that are

basic management philosophies that insure that they will accomplish their business activity goals

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(133). Then the “Jeong-do Management which mean they will succeed through the constant

development of capability based in ethical management. LG ‘s vision is to become the market

leading company with broad market recognition (133).

For this year their key sustainability management initiatives are to continue strengthening

their fundamentals. Their product leadership, which is a key prerequisite for being market leader,

continues to improve and their fundamentals are becoming stronger across their entire

organization (134). They will apply everything that they have accomplished in order to lead the

market with differentiated products and services that only they can deliver. They are securing

their “differentiated product leadership” by fully aligning their thoughts and actions with the

market and customers, constantly generating new ideas (134). For them it is so important that

they transform their work and management style to be fully aligned with their customers needs.

LGE is implementing four strategic tasks: Corporate Social Responsibility Change Management,

CSR Risk Management, Stakeholder Engagement and Strategic Social Contribution (135). From

product Research and Development through purchasing, production, sales and after sales service,

LGE is determined to improve its CSR execution while strengthening its efforts to build

consensus and partnership with stakeholders (135). For their CSR Risk Management they want

to establish a monitoring system, respond to stakeholders’ requirement and regulations, perform

risk self-assessment and audit of high-risk group (135). For their strategic social contribution

they want more employee participation, contributions using LGE technology and products and

global partnership programs (135). For their CSR change management they want to comply with

international CSR standards, support management of corporate CSR issues, support decision-

making and operate CSR council, and train employees (135). LG is becoming a more powerful

company every year in 2012 they were named by Forbes one of the most powerful brands in the

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world (136). It also is one of Forbes Global 2000 leading companies in the world, which are the

biggest public companies (136).

Competitor #2 – Panasonic Corporation

Panasonic Corporation is comprised of various business domain companies from AV to

home appliances, to industrial solutions and other consumer electronic products. Each company

has its own Research and Development, production, and sales functions that satisfy specific

consumer needs worldwide. Its Board of Directors controls Panasonic management. The

Company’s Board of Directors is composed of seventeen Directors including three Outside

Directors. In accordance with the Company Law of Japan and related laws and ordinances, the

Board of Directors has ultimate responsibility for administration of the Company’s affairs and

monitoring of the execution of business by Directors (137).

The Company has an ideal management and governance structure for their four

Divisional Company-based management structures. Under this structure, the Company has

empowered each of four Divisional Companies and business divisions through delegation of

authority (137). They employ an Executive Officer system to provide for the execution of

business at its various domestic and overseas Group companies (137). This system facilitates the

development of optimum corporate strategies that integrate the Group’s comprehensive strengths

(137). The Company has twenty Executive Officers which include senior managements of each

of four Divisional Companies, senior officers responsible for certain foreign regions and officers

responsible for corporate functions (137).

Kazuhiro Tsuga is the President of Panasonic Corporation since 2012; under his direction

the company is now moving forward to achieve its goal of becoming the electronics industry’s

leader in green innovation by the time it celebrates its 100th anniversary in 2018 (138). Tsuga

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joined Panasonic, then known as Matsushita Electric Industrial Co., Ltd., in 1979. Prior to taking

on the leadership of the global company, Tsuga was President of AVC Networks Company, the

internal arm responsible for Panasonic's audiovisual and information technology equipment

business, from 2011, and served concurrently as Senior Managing Director and Member of the

Board (138). From 2008 to 2011, Mr. Tsuga led Panasonic's Automotive Systems Company as

President while serving as Managing Executive Officer of the corporation. During this time, he

revived Panasonic's automotive electronics business and laid the foundation for its expansion

(138).

Panasonic Corporation’s Basic Management Objective was formulated in 1929 by the

company’s found, Konosuke Matsushita (139). Their Basic Management Objective is

"recognizing our responsibilities as industrialists, we will devote ourselves to the progress and

development of society and the well-being of people through our business activities, thereby

enhancing the quality of life throughout the world" (139). It is their business philosophy that

embodies their mission and devotion to the progress of society and the well being of the people

worldwide through their business activities (139).

Panasonic Corporation created a Midterm Management Plan to reach their goals in 2016.

Their main objective is lo immediately eliminate unprofitable businesses (140). They want to

strengthen each business division; they will be responsible for Research and Development,

production and sales as well as their balance sheet to increase sustainable cash and profit (140).

To eliminate all unprofitable business divisions they will change the structure of business. They

will introduce rugged smartphones for the business-to-business market (140). We will also

outsource Research and Development and manufacturing to reduce its fixed costs (140). Also

they want to expand business and improve efficiency shifting from in-house approach (140).

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They also want to improve their financial position. They are going to improve by disposing

assets and reducing inventory to decrease working capital. Cash will be used mainly to reduce

debt and put them back close to a positive net cash position (140). They will also promote energy

related field in their device business. They have expanded the solar panel business not only in

residence or buildings but also in automobiles; and also the storage battery business in energy

saving systems and automobiles (140). Panasonic is making as much as they can in order to grow

and strengthen their company. They are in the list of Forbes Global 2000, which are the world’s

biggest public companies (141).

Competitor #3 – Samsung Electronics

The Board of Directors administers the performance of management, sets corporate

management policies, and makes strategic decisions on business execution. It is composed of

four executive directors and five independent directors (142). It consists of an independent

director majority o both guarantee the board’s independence and transparency. Also the Board

establishes a transparent decision-making process with inputs from a broad spectrum of outside

experts (142). The independent directors meet separately from the executive directors in order to

promote a free exchange of ideas on all aspects of the company's management (142). All

directors are prohibited from engaging in business activities within the same industry without the

approval of the Board of Directors (142).

Oh-Hyun Kwon has been the Vice Chairman and Chief Executive Officer at Samsung

since 2012 (PDF5). He also serves as the Vice Chairman and Head of Samsung Advanced

Institute of Technology (PDF5). Mr. Kwon has been the Vice Chairman and Head of Device

Solutions since 2011. Before that, Kwon was the President and Head of Semiconductor Business

at the company (PDF5) He also served as the President and Head of System LSI Division at the

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company. In 2000, Kwon was appointed as the Head of LSI Technology at the company. He also

served as the Head of ASIC Business at Samsung (PDF5).

Jong-Kyun Shin has been the President and Chief Executive Officer at Samsung since

2013 (PDF5). He has been the Head of IT & Mobile Communications Business at Samsung since

2012. Previously from 2009 to 2011, Shin was the Head of Mobile Communications Business at

the company (PDF5). He was also the Head of R&D Team of Mobile Communications Business

at Samsung from 2006 to 2008 (PDF5).

Boo-Keun Yoon has been the President and Chief Executive Officer at Samsung since

2013. He has been the President and Head of Consumer Electronics at Samsung since 2012.

Previously from 2007 to 2011, Yoon was the Head of Visual Display Business at the company.

He was the Head of R&D Team of Visual Display Business at Samsung from 2003 to 2007

(PDF5).

Sang-Hoon Lee has been the President and Chief Financial Officer at Samsung since

2012. Previously from 2010 to 2011, he was the Head, Strategy Team 1 of Samsung Corporate

Strategy Office at Samsung. From 2008 to 2010, Lee was the Head of Corporate Management

Support Team at the company. He also served as the Head of Strategy and Planning Office at

Samsung from 2006 to 2008 (PDF5).

The Board of Directors is also composed of five Independent Directors, which are Eun-

Mee Kim, Han-Jong Kim, Kwang-Soo Song, Byeong-Gi Lee, and In-Ho Lee. All of them started

in the Board of Directors in 2012 or 2013 (PDF5).

In 2013 Samsung Electronics extended its market leadership in core businesses, including

the mobile communications, TV and memory chip businesses (PDF5). In mobile

communications, due to excellent smartphone performance, they achieved the remarkable result

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of number one ranking in both sales and market share to solidify their industry leadership. In the

TV business, they were number one in sales, achieving that rank for the eighth consecutive year,

as well as leading the industry in profitability. Their memory business saw significant gains in

2013, owing to improved cost savings and advanced process technology development, which

helped boost sales of differentiated and high-value-added products such as SSDs (Solid State

Drive) (PDF5). For the 22nd consecutive year, their memory business achieved Number one

global market share, which they have held since 1993 (PDF5).

Samsung continued to reinforce their core competencies in Research and Development

and design by recruiting outstanding talent and by restructuring. By establishing an open

innovation system, they strengthened partnerships with outside research institutes and launched

new professional organizations, such as Softech and the Big Data Center, to strengthen their

software capabilities (PDF5). They are building a new Research and Development Center to

develop future technologies including materials. Anticipating future growth engines, they have

focused resources and capabilities on health and medical equipment; B2B services and life care

areas, such as Smart Home and mobile health applications (PDF5). These new technologies and

services are attracting favorable reviews both in Korea and abroad.

Samsung will focus on sound management to increase profitability. They expect to fortify

resource management efficiency companywide, including in investments and global supply chain

management capability, which will result in improved performance (PDF5). They expect to

reorganize systems in order to enhance response time, minimize management risk or uncertainty

and monitor ongoing compliance (PDF5). Fortune listed Samsung Electronics 21st on its

World’s Most Admired Companies list (PDF5).

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Samsung is making a big push into being the center of the smart home today with its

acquisition of SmartThings, which allows people to sync up their connected devices onto a single

smartphone app and hardware hub (144). SmartThings will operate as an independent company

and will be moving from its home base of Washington D.C. over to Samsung’s Open Innovation

Center in Palo Alto (144). The Open Innovation Center is an investing arm and startup

accelerator for U.S. companies that Samsung is interested in. With this acquisition Samsung will

keep on growing and innovating new products.

Competitor #4 – Sony Corporation

Sony management is governed by its board of directors, which is appointed at the annual

shareholders meeting. Inside the board there are three committees each of them with a different

function, the Nominating Committee, Audit Committee and Compensation Committee. Each of

these committees consists of directors named by the board that also oversee the management of

Sony Group's business operations, appoint and dismiss the statutory committee members,

appoint and dismiss Representative Corporate Executive Officers and Corporate Executive

Officers (146).

Mr. Osamu Nagayama is Sony Chairman of the Board of Directors since 2013 and

Independent Director, and he is also member of the Nominating Committee that determines the

content of proposals regarding the appointment and dismissal of Directors (146). The Audit

Committee is in charge of monitoring the performance of Directors and Corporate Executive

Officers. As for the Compensation Committee they set policies on the contents of individual

compensation for Directors, Corporate Executive Officers, Corporate Executives and Group

Executives (145)

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Another important figure in Sony’s management is their president Kazuo Hirai. Mr. Hirai

has been serving as President, Chief Executive Officer, Representative Executive Officer and

Director of Sony since June 2012. He is a member of Nominating Committee. He used to serve

as Vice President, Executive Vice President and Executive Officer in the Company, and worked

for another subsidiary of Sony (146).

Masaru Kato is the Vice Chairman at Sony since 2014. He joined Sony in 1977 and held

variety of positions, including Representative Corporate Executive Officer, Executive Vice

President and Chief Financial Officer and others. Also another important executive is Mr.

Kenichiro Yoshida. Mr. Yoshida was named Chief Financial Officer, Executive Vice President,

Representative Executive Officer and Director of Sony in June 19, 2014. He joined the Company

in April 1983 (146).

It was March 27 of 2012 when Sony announced the establishment of a new management

structure. President Kazuo Hirai led the change, these changes intended to drive revitalization

and growth across Sony's core electronics businesses, and deliver compelling user experiences

through convergence of the unique assets in place throughout the Sony Group (147). With their

new management team their goal is to accelerate decision-making and execution while they

create a foundation for revitalizing the electronics business and repositioning it for growth

(PDF6).

With the new team they made key decisions aimed at creating new businesses while

strengthening core businesses. Among those decisions were decisions on investments to expand

their CMOS (Complementary metal-oxide-semiconductor) image sensor manufacturing capacity;

the acquisition of Gaikai, Inc., which is a United States based developer that provides interactive

cloud-based gaming services (PDF6). Sony also established Sony Olympus Medical Solutions

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Inc., which is a joint venture with Olympus Corporation that plans to deliver new innovative

medical products, such as surgical endoscopes, and new medical and imaging systems solutions

business (PDF6). Sony also realigned their business and asset portfolio and strengthened their

financial position. Some of the decision made include the sale of the chemical products-related

business, also the sale of assets including their U.S. headquarters building in New York City

(PDF6). In order to increase efficiency and reinforce their business infrastructure, they

implemented structural reforms including optimizing resources and restructuring their marketing

organization in developed markets, consolidating certain manufacturing operations in Japan, and

expediting measures to reduce headquarters headcount (PDF6).

Sony also executed various initiatives to turn around the electronics business by working

to strengthen their mobile, imaging and game businesses; their three core electronics businesses,

turning around the television business, and expanding their business in emerging markets

(PDF6). They also improved profitability in their entertainment and financial services

businesses, both of which already contributed stable profit (PDF6). Profitability in their pictures'

businesses grew through the successful release of several global hit movies, including The

Amazing Spider-Man, and the latest James Bond film, Skyfall, and the expansion of its

television networks, production and its distribution businesses (PDF6). Market share and

profitability in the recorded music business benefited from their efforts to discover, nurture and

develop new artistic talent such as One Direction, who achieved significant global success in

fiscal year 2012 (PDF6). Their financial services business also grew its revenue and operating

profit by delivering financial products and services, primarily life and non-life insurance, with

high customer satisfaction (PDF6).

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2. Discussion of Relevant Economic Factors Affecting the Industry

Sharp is in an Oligopoly market. The market is run by companies with similar products such

as TV’s, and energy solutions.

Leaders

Overall Consumer Electronics and LCD:

Overall, evidenced by the financial positions of Sharp and its competitors, Samsung is a

clear leader. They’ve reached that point taking over areas that other companies specialized in.

Originally they overtook the LCD market from Sharp who was a major part of developing the

technology through the decades in the late 20th century. This was evident in Sharp’s and

Samsung’s historical analysis. Samsung is now the clear leader in the LCD market. Samsung

also has successfully infiltrated the Apple iPhone market by copying much of Apple’s design,

but with upgrades Apple was holding off on to utilize with their forced obsolescence strategy

(1 49 ).

Energy Solutions:

Panasonic is a leader in energy solutions amongst the four of Sharp’s highlighted

competitors in this report. Sharp appears to have the better technology, however, Panasonic is

garnering more attention with partnerships and winning multiple major specific contracts (150)

(151). Sharp has more of a focus on business to business installation of energy solutions, while

Panasonic does both business to business and business to consumer (152).

Policy

LCD TVs

As discussed in Sharp’s SWOT analysis the market has been involved in multiple price

fixing lawsuits with multiple competitors. This is a typical side-effect of an oligopoly based off

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of the idea of Game Theory. The idea is that collusion is attractive to businesses in an oligopoly

because together they can prevent new entrants, increase profitability, and just overall reduce

uncertainty for businesses by essentially working together as a monopoly (15 3 ). This practice is

outlawed by the US Anti-trust law, but the numerous price-fixing lawsuits make it clear the anti-

trust law has not been a significant enough deterrent to prevent collusion amongst competitors in

the LCD TV market.

Energy Solutions

Currently the market for renewable energy is taxed with high costs. Once these costs

decline then the market growth should skyrocket quickly (154). However, market growth in

renewable energy has declined in the past 78% in the past four and half years (155). In 2014 this

aspect of the market finally saw a rise that many believe is a signal of an end to the decline

(155). This is mainly attributed to decreasing costs in photovoltaic cells for solar panels, the

beginning of what this side of consumer electronics needs to make the market grow (155).

Market Share

LCD TVs:

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As shown through the historical analysis and now further with the above chart, Sharp has seen a

decline in market share for LCD TVs while Samsung has dominated the market (156). It is clear

LG Electronics is beginning to close the gap that Samsung has managed, but that has not

hindered Samsung’s growth as the overall dominating market share for LCD TVs, the aspect of

the market Sharp is currently most focused on.

Energy Solutions

The market for renewable energy is currently smaller than most others because of policy issues.

However, the market is expected to see major growth in the coming years with reduced costs in

renewable energy as described in the Policy section.

Macro-Environmental Factors

Social

o Wearable Technology-A Recent social trend is that of wearable technology. It has

taken off in 2014 with the interest in health tracking technology that wraps around

wrists, in shoes, and on ankles (157). In addition the google glass technology is

one of the newest products drumming up major interest, in addition to the latest

virtual reality tool, the Oculus Rift that got its start through a Kickstarter

campaign (158). All of these products opened up major new markets.

o Social Media-The interest in social media continues to expand into different

directions as more Twitter and Snapchat are the current trending social media

devices.

Technology

o Short Product Life-Span-Many successful technology companies are running a

strategy of forced obsolescence which has them coming out with new updated

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products every year. This has created a short product life-span for successful

products.

o Wearable Technology-While this is listed as a social trend it is also a

technological trend.

Environmental

o Sustainability-A major push for an environmental trend is to increase the product

life-span of products (159).

o Clean Energy-Clean energy is something that has been and continues to be pushed

for to improve the world’s ecosystem.

Economy

o Global-With the aid of technology the world economy is shrinking making it easy

for transactions on complete opposite sides of the world to be completed within a

week.

o Bull Market-The economy has recovered from its 2008 crash and is currently

strong with trends of increasing consumer confidence.

Political/Legal

o Stagnant-The political system has been in gridlock the past couple years, there is

no indication of this changing with the recent increase in Republicans to take over

Congress.

Implications: Consumer Electronics has the most to gain with the trend of Wearable

Technology. Sharp still has the ability to not fall behind while the trend is still new. This could

then be incorporated with the clean energy technology they have already been developing. With

an increasingly global economy and a strong market, the market is in a good position for

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expansion. A stagnant political system makes for a favorable environment when it comes to

creating new market policies.

3. Dominant Economic Factors

Note: All Information in this section is used from various previous sections.

Market Size and Growth Rate

As discussed in the relevant economic factors, Consumer Electronics is in an Oligopoly

with several large companies controlling a saturated, stagnant market preventing new entrants.

The two specific market segments inside consumer electronics Sharp is focusing on, TVs and

Energy Solutions, are on two different trajectories. As discussed in the relevant economic factors

the TV segment is ruled by Samsung and LG and the market itself is done growing, as TVs have

reached all populations.

The renewable energy segment is small and growing at a slow rate. As discussed in the

relevant economic factors, it is on the verge of growing large rapidly once costs drop in order to

have an appeal to a larger consumer base. Costs have already begun to drop with photovoltaic

cells that are used in solar panels, as discussed in the relevant economic factors section.

Scope of Competitive Rivalry

The consumer electronics industry is an industry on a global scale. Sharp is located in

Japan. Sharp’s competitors are located in other Asian countries, but they all sell consumer

electronics on all six populated continents. The true global stance of this industry is identified

throughout the historical analysis as all five companies slowly expanded to a global scale

throughout their histories.

Demand-Supply Conditions

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Profit margins are dropping as competitors compete with each other’s prices. This is

apparent through the high cost of sales compared to revenues; this is before taking into account

other overhead and non-operating expenses. This small margin is likely present in the industry

because differentiation is becoming increasingly difficult in a saturated industry filled with many

major players.

Market Segmentation

Consumer Electronics is divided into dozens of segments. Every company has their hands

in tens of different types of electronics. This includes TVs, computers, phones, video game

consoles, renewable energy, and appliances. These products are all segmented by their

characteristics into distinct segments.

Pace of Technological Change

In order to stay as a major player in the Consumer Electronics industry companies must

continually research and develop new technology. Most segments continually update their

products every year with the exception of most TVs and appliances. If a company is unable to

keep up with this yearly change they are likely to fail fast.

4. Identification of Key Competitive Forces in the Industry

The Five Forces models of competition are five competitive forces that affect industry

attractiveness. The five forces help determine the industry’s strengths and weaknesses. The five

forces are buyer bargaining power, threat of substitute products, supplier bargaining power,

potential of new entrants in the industry, and rivalry among competing sellers. Each of the forces

gives a good diagnosis of the competition within an industry.

The competitive force of buyer bargaining power is all about the consumers. According

to the text this force is about the buyers having sufficient bargaining leverage to obtain price

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concessions and other favorable terms, and the extent to which buyers are price sensitive. In the

consumer electronics industry there is a lot of competition. The buyer power is a strong

competitive force in this industry. Since there are so many different companies inside the

consumer electronics industry, buyers have strong power because they can easily go to other

competitors, since many products in the industry are the same between companies. For this

industry buyer switching cost to competing brands is low, that gives the buyers more power

against sellers. Also in this industry buyers have the ability to postpone purchases until later if

they do not like the prices offered by sellers, giving them power over the sellers. An example in

the industry in which buyers have strong power over their sellers is in choosing between an

Apple IPhone or a Samsung Galaxy phone, there is a low switching cost since the products are

similar and quality is similar too, just a little difference in some things but both basically perform

as good as the other one.

The competitive force of substitutes products is about companies in one industry who are

vulnerable of the actions of other companies in another industry, when consumers see products

of another industry as substitutes. The competitive pressure from substitutes is strong when there

are good substitutes are available or new ones are emerging. The competitive pressure from

substitutes is weak when good substitutes are not ready available or just do not exist. For

consumer electronics there is not another industry that can be a substitute for their products.

Consumer Electronics is an industry that as an industry it does not have substitutes but within the

industry and its products their products have various substitutes.

The competitive force of potential new entrants has several factors that determine whether the

threat of new companies entering the market present competitive pressure. For the consumer

electronics industry there is a high barrier in order to enter. Since it is an industry where high

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capital is required, there is a large total dollar investment needed to enter the market

successfully. Also it is a difficult industry to make a name and have brand recognition, since

many companies have done an excellent job with their branding. Also another factor is with

networking, there is a challenge on building a network of distributors-retailers and also securing

space on retailer shelves. Retailers can be cautious on accepting a new product where there is

low brand recognition because it can affect their sales. To enter the retailers and compete with

other companies who already have brand recognition, new entrants will have to cut their prices in

order to get retailers to provide dealers and distributors with higher markups and profit margins

or by giving them big advertising and promotional allowances. For consumer electronics

industry there is a big threat with new companies entering the market.

The competitive force of supplier bargaining power depends whether the suppliers of the

industry represent a weak or strong competitive force depending on the whether the supplier has

sufficient bargaining power. In this industry the suppliers have high bargaining power due to

several reasons. The first reason is about the supplier providing a differentiated input that

enhances performance, quality or image of the industry’s product especially in the consumer

electronics industry where quality and product innovation are key requirements in the products.

Another reason for the supplier having high bargaining power is industry members having a high

cost in switching their purchases to alternative suppliers. Since many of the big companies are

their own suppliers there has to be a high cost of switching to another supplier. An example is

Apple and Sharp, Sharp is supplying apple their LCD screens for their iPhones and IPads, since

Sharp’s LCDs are high quality and have good performance, they have a high supplier bargaining

power over Apple; since they are providing them with high quality raw materials in order for

them to use them for their high quality and differentiated products.

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The competitive force of rivalry among competing sellers is high in the consumer

electronics industry. Consumer electronics is an industry that is globally growing and there is

high competition. For this industry competing sellers are active in making fresh moves to

improve their market standing and business performance. Many consumer electronic companies

are trying to differentiate their products in order to increase their demand and differentiate

themselves from other companies, so that keeps on the rivalry high. Also another factor is that

buyers’ cost of switching to another seller is low. Meaning that there are so many options in

retailers’ stores of buying consumer electronics that switching cost to another seller is low.

Rivalry increases also when one or more competitors become dissatisfied with their market

position; when firms are in financial trouble and pursue an aggressive strategy of lowering their

prices, greater advertising or merge with other rivals. In consumer electronics there are always

companies who give discounts for example in Best Buy they have many discounts for certain

brands, that influences the buyer in deciding which brand to buy specially if there is not much

differentiation in the products. Definitely in this industry there is a high force of rivalry among

competing sellers.

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5. Discussion of the Current Driving Forces in the Industry

Industry driving forces “are forces outside the firm (external factors) that trigger the

change of strategy in an organization” (160). Industry participants alter their actions based upon

the actions of their competitors.  The current driving forces in the consumer electronics industry

are increasing globalization, product innovation, marketing innovation, entry or exit of the major

firms, changes in cost and efficiency, changing societal concerns, attitudes, lifestyles. Increasing

globalization is one of the driving forces because this how the companies grow and introduce

their products to new markets. A company may start at the regional level, then grow to the

national level, then the national level, then international level, and then finally have products

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available on the global market. Companies will also tend to move where costs are the lowest to

produce their products, so they can make higher profits margin in that area. Consumer electronic

companies compete with one another to be the first company to a new market to gain an

advantage on one another. Another driving force of the consumer electronics industry is product

innovation. This can be key for companies because having new innovations offered in your

products can attract first time buyers, which helps industry growth and creates distance or

narrows the gap between you and your rival’s products. The next driving force is marketing

innovation, which challenges companies to bring their products to market to spark the

consumer’s interest in what they have to offer. By a company market a product a correctly, this

can lead to a wider industry demand, differentiate the company’s product from competitors,

lower the cost of the product, and lastly can alter competitors positions and cause strategy

revisions. Entry or exit of the major firms is another industry driving force for the consumer

electronic industry. When a large amount of foreign companies enter domestic dominated

industry the competitive conditions change drastically. Usually when this happens a company

from another industry may also attempt to enter this other industry through two ways: one

through acquisition of an existing company or two start their own company. The next driving

force in the consumer electronics industry is changes in cost and efficiency. Having a variety of

costs in an industry among competitors can change the state of the competition and how they go

about pricing their producing and pricing their products. By a single company have more

affordable models offered it can cover the lower-income households while still have their more

expensive models as well to cover the entire markets need for that particular product. The final

driving force in the consumer electronics industry is changing societal concerns, attitudes, and

lifestyles. In this modern day peoples’ lifestyles are constantly changing and these companies

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have to keep up with the latest updates to keep up the changing lifestyles. For some the concerns

of a product can make or break if they are going to purchase that product. If a company uses

harmful chemicals in their products or doesn’t discharge chemicals used in producing the

product correctly, then that person can easily purchase a competitors product. All of these forces

can major contributors to how companies in the same industry go about try to out compete one

another for dominate share in the market and to gain attention of the consumers so they will

purchase their products over a rivals.

6. Creation and Discussion of Strategic Group Map

Note: All data in this section was compiled from previous sections

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The Consumer Electronics industry has varying degrees of differentiation and financial

success. These aspects are measured by the strategic group map above.

Samsung manages to differentiate the most with their brand name and their unique ability

to attack existing leaders in Consumer Electronics market segments. In addition they are one of

the most financially successful companies amongst Sharp’s competitors.

Sony has managed to differentiate themselves with their PlayStation console and high

quality audio accessories. Their movie and music business has gone a long way to assisting them

in their strong financial success.

LG Electronics is still differentiating by selling to higher-end consumers. They align with

their products to consumers and that is a large reason why their market share has continually

grown over the past five years. However, their cost of sales cuts into a major portion of their

revenue, which is the major reason their financial success is so low.

Panasonic was differentiating, but now appears to be restructuring their business and

shifting to a best-cost provider. They have been outsourcing to reduce costs, eliminate

unprofitable businesses and restructuring marketing. This is likely a response to their low

financial success.

Sharp is currently sitting at a best-cost provider strategy making them the least

differentiated of the five companies in this report. In addition they are also in the least financially

successful position because they have had a negative profit margin the past three years. Only in

2014 Sharp was able to create a profitable year.

7. Identification and Discussion of Industry Key Success Factors

An industry’s key success factors are those competitive factors that most affect industry

members’ ability to prosper in the marketplace. They may include particular strategy elements,

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product attributes, resources, competitive capabilities, or intangible assets. These key factors are

very important to future competitive success that all firms in the industry must pay close

attention to them or risk an eventual exit from the industry. There are various key success factors

in the consumer electronics industry.

Another key success factor in the industry is the ability to make high quality products,

especially in this industry where customers insist on product reliability. In this industry the

consumers are looking for the best quality products. Having the best quality products gives the

firm a competitive advantage over other firms. This industry is so big that quality in their

products is a big thing, which firms need in order to survive, since there is a lot of competition.

An example is in a retailer if you buy a television of a particular brand and after a while it stops

working or has a defect, you can take it back and they will let you change it, and you can pick

another brand for the same price or pay the difference. People after experiencing the low quality

product of a particular brand, they tend to change to other brands. So quality is definitely a key

factor in this big industry.

Another key success factor for the industry is their ability to respond to demand. Society

has demanded technological production for the past several decades. Since the beginning of the

consumer electronic industry they have tried to respond to the demand efficiently by providing

customers with technology products. A good example is the mobile devices sector after the

appearance of the first mobile phones; the public has demanded more innovative devices. This

led to the invention of color displays and integrated cameras as well as business applications in

the mobile devices (161). This industry is a very demanding industry in which innovation is

always a key for the firms, consumers always want more and more. Definitely their ability to

respond to the demand is a key factor in the industry.

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Another key success factor is their ability to compete and keep up with competition.

Competition is the moving force of every production because by competing, companies come up

with more and more innovative technological products (161). This is evident in the success of the

electronic industries. A report by the leading technology experts IBM indicates that through

competition between Japanese electronic companies and western corporations, the industry has

developed more attractive products and has incorporated more advanced technologies (161).

Another example is the competition between Sony and Microsoft has led to the distribution of

two of the most successful game consoles, the PlayStation and Xbox (161).

Another key success factor in this industry is their talented workforce. This industry

offers some of the most attractive employment opportunities in terms of environment and labor.

EHS Today Magazine concludes that by providing comfortable social conditions and especially

by increasing the pay rates for technology specialists in developed countries, electronic

industries have become a sought-after employer for educated individuals (161). This gives the

technology companies the opportunity to manage talent in their organizations and to enjoy

progressive work by specialists (161). Expertise in this industry is key, since it is an industry in

which firms have to keep on innovating products in order for them to survive against their rival

firms.

The ability to lower their costs in manufacturing is a key factor in the industry. Many

American and European technology giants have successfully exported their productions abroad,

many companies have assembly plants in Asia and pay less for production resources and labor

costs (161). Specialists from the Warwick Institute for Employment Research concluded that

such companies receive the same level of production quality by their employees and pay less for

their labor (161). By doing that firms can save costs and enhance revenue rates and production

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quality. An example of organizations that have done that are Intel and Nokia who have their

assembly plants in countries like Thailand and China where the labor costs are lower that in the

United States (161).

Another key success factor is a marketing related factor, which is having a well-known

and well-respected brand name and also advertising. When consumers purchase products, they

will consider the brand first, because it indirectly leads consumers to associate with the quality,

functions, and design of products (162). Having a well-known brand in this industry is a difficult

thing to accomplish, but many brands have accomplished that and have done a great job. Firms

in the industry accomplish this with their high performance, making consumers trust them about

their product and making them trust that what they buy is worth their money. Also with their

marketing, companies in the industry are always creating new products that they market so the

consumers can know about the new products. Advertising in this industry is a key factor in order

for their consumers to know what is happening so they can go out and buy the products.

Consumer electronics have many key success factors, which give firms competitive advantage

over other rival firms.

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symbol=SHCAY.PK&WTmodLOC=C4-Officers-567. http://sharp-world.com/corporate/info/ci/board/index.html 68. http://www.bloomberg.com/news/2013-05-13/sharp-to-name-kozo-takahashi-as-

president-nikkei-says.html69. http://www.bloomberg.com/news/2013-09-18/sharp-board-meeting-to-discuss-capital-

increase-forecast-change.html70. http://blogs.wsj.com/japanrealtime/2014/01/09/sharp-pres-trying-to-change-inward-

looking-corp-culture/71. PDF 3

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72. http://www.sharp-world.com/corporate/ir/governance/policy/ 73. http://www.marketingteacher.com/pricing-strategies/ 74. http://www.sharpusa.com/customersupport/wheretobuy.aspx 75. http://www.mynewsdesk.com/sg/qnet/news/sharp-chooses-qnet-s-e-commerce-direct-

selling-platform-to-market-its-proprietary-plasmacluster-ion-air-purifiers-59611 76. http://www.sharpusa.com/CustomerSupport/Authorized-Reseller.aspx 77. http://smallbusiness.chron.com/pricing-strategy-considerations-new-product-1797.html 78. http://smallbusiness.chron.com/premium-pricing-strategy-1107.html 79. http://www.cfr.org/asia-and-pacific/asean-association-southeast-asian-nations/p18616 80. http://www.digitaltrends.com/home-theater/led-vs-lcd-tvs/ 81. http://finance.yahoo.com/q/hp?s=066570.KS+Historical+Prices 82. http://finance.yahoo.com/echarts?s=066570.KS+Interactive#%7B%22range%22%3A

%221y %22%2C%22scale%22%3A%22linear%22%7D83. http://finance.yahoo.com/q/pr?s=PCRFY+Profile 84. http://panasonic.net/corporate/ 85. http://panasonic.net/ir/inquiry/ir_03.html 86. http://finance.yahoo.com/q/pr?s=005930.KS+Profile 87. http://www.samsung.com/us/aboutsamsung/ 88. http://finance.yahoo.com/q/hp?s=005930.KS+Historical+Prices 89. http://finance.yahoo.com/echarts?s=005930.KS+Interactive# 90. http://www.sony.com/SCA/About_Us/index.html 91. http://www.sony.com/SCA/who-we-are/overview.shtml 92. http://www.google.com/finance/historical?

q=TYO:6758&ei=P2F9VJmhHMSn8gaFiIDICg93. http://www.lg.com/global/about-lg/corporate-information/at-a-glance/overview 94. PDF495. www.lg.com/us/tvs 96. www.lg.com/us/home-theater-systems 97. www.lg.com/us/sound-bars 98. www.lg.com/us/monitors 99. www.lg.com/us/data-storage/all-data-storages 100. www.lg.com/us/computer-accessories/lg-LSM-100-mouse-scanner 101. www.lg.com/us/cell-phones 102. http://www.wiglafjournal.com/marketing/2012/04/lgs-brilliant-marketing-strategy/ 103. http://www.lg.com/global/sustainability/customer/communication-with-customers 104. http://www.lg.com/global/about-lg/corporate-information/global-operations 105. http://www.lg.com/us/commercial/display-partners/distribution-partners 106. http://www.investopedia.com/terms/c/competitive-pricing.asp 107. http://www.panasonic.com/au/consumer.html 108. http://www.panasonic.com/au/consumer/tvs-projectors/led-lcd-tvs.html 109. http://www.panasonic.com/au/consumer/tvs-projectors/led-lcd-tvs/th-60as800a.html 110. http://www.marketingteacher.com/pricing-strategies 111. http://articles.economictimes.indiatimes.com/2010-09-11/news/27574937_1_panasonic-

india-director-lcd-tv-direct-cool-refrigerator112. http://www.ttiinc.com/page/panasonic 113. http://www.bradsdeals.com/stores/panasonic

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114. http://www.panasonic.com/caribbean/consumer/viera-televisions-learn/feature/ panasonic-viera-is-the-official-tv-of-fc-barcelona.html

115. http://www.samsung.com/us/aboutsamsung/ 116. http://www.samsung.com/us/mobile/cell-phones/ 117. http://www.samsung.com/us/mobile/cell-phones/all-products 118. http://www.samsung.com/us/mobile/cell-phones/all-products 119. http://www.samsung.com/us/experience/uhd-tv/ 120. http://www.samsung.com/us/video/tvs/KN55S9CAFXZA 121. http://www.samsung.com/us/video/tvs/UN65H8000AFXZA 122. http://www.samsung.com/us/video/tvs/PN64F8500AFXZA 123. http://www.marketing91.com/marketing-mix-of-samsung/ 124. http://www.investopedia.com/terms/c/competitive-pricing.asp 125. http://www.sony.com/index.shtml 126. http://smb.store.sony.com/televisions-video/cat-27-catid-Televisions 127. http://smb.store.sony.com/all-android-smartphones/cat-27-catid-Android-Smartphone 128. http://sony-unilateral-pricing.articles.r-tt.com 129. http://www.theverge.com/2014/2/26/5451012/sony-closing-majority-of-us-retail-stores-

by-end-2014 130. http://www.sony.com/SCA/who-we-are/global-marketing-partners/overview.shtml 131. http://www.lg.com/global/investor-relations/company-info/board-of-directors 132. http://www.lg.com/global/about-lg/corporate-information/executives/office-bios/bon-

joon-koo 133. http://www.lg.com/global/about-lg/corporate-information/jeong-do-management 134. http://www.lg.com/global/sustainability/csr-framework/top-management-message 135. http://www.lg.com/global/sustainability/csr-framework/csr-management 136. http://www.forbes.com/global2000/list/ 137. http://panasonic.net/corporate/governance/ 138. http://panasonic.net/corporate/management/profile/ 139. http://panasonic.net/corporate/philosophy/objective/ 140. http://panasonic.net/ir/vision/pdf/20130328_vision_note_e.pdf 141. http://www.forbes.com/global2000/list/ 142. http://www.samsung.com/us/aboutsamsung/investor_relations/corporate_governance/

boardofdirectors/IR_BoardComposition.html143. PDF5144. http://www.forbes.com/sites/aarontilley/2014/08/14/samsung-smartthings-acquisition-2/ 145. http://www.sony.net/SonyInfo/News/Press/201203/12-043E/ 146. http://www.sony.net/SonyInfo/csr_report/governance/index2.html 147. http://www.reuters.com/finance/stocks/companyOfficers?

symbol=SNE&WTmodLOC=C4-Officers-5148. PDF6149. http://www.cnet.com/news/samsung-you-cant-copy-iphone-features-if-iphones-dont-

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36565151. http://www.panasonic.com/business-solutions/panasonic-awarded-contracts.asp

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152. http://www.greenbiz.com/blog/2014/04/16/under-panasonics-eco-mantra-solutions- trump-products

153. http://tutor2u.net/economics/revision-notes/a2-micro-oligopoly-game-theory.html 154. http://www.un.org/esa/sustdev/sdissues/energy/op/beijing_re_egm/beijing_re_report.pdf 155. http://www.unep.org/NEWSCENTRE/Default.aspx?

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the-key-tech-trend-of-2014-1231194158. http://www.oculus.com/ 159. http://www.trendsactive.com/#!/our-trends/societal-trends/ 160. http://www2.uhv.edu/wang/MGT6331/Questions/Driving%20forces%20vs.%20Key

%20Success%20Factors.htm 161. http://www.ehow.com/info_8031792_key-success-factors-electronic-industries.html 162. http://link.springer.com/chapter/10.1007%2F978-3-642-14616-9_70

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Strategic Plan

1. Discussion of Likely Strategic Maneuvers from Relevant Competitors in the Next 3

Years

Competitor #1 - LG Electronics

Note: All information in this section is deducted from information in previous sections.

LG is a big company in the consumer electronics industry and a firm competitor to Sharp

Corporation. Lately they have been pulling consistent profits, as mentioned before. They have a

high cost of sales partly because they incur heavier expenses as a Broad Differentiation

company. It is likely that LG will have to find the dog or dogs that are creating these high costs.

They need to cut costs to free up a profit margin so they will be able to actively pursue new

technology. After cutting costs LG will appear as a much stronger threat to Sharp, as the

increased profits will provide them with the ability to identify and enter new markets before

Sharp.

As mentioned before in 2012 they started the “Life’s Good” motto, to personalize the

brand, they created a “cheery face” transformation of its LG logo. They also enhanced their

advertising with sponsorships in the highly rated NCAA college basketball tournament, teamed

with Oprah Winfrey to give away refrigerators and televisions, were aggressive about placing

their televisions in hotels and motels, and teamed with CNN to provide televisions at a number

or major airports. It is likely that they will keep on sponsoring big events, and aggressively

placing their products in areas in which there is a large amount of traffic in order to continue to

generate a stronger brand image on both a domestic and international level. As mentioned before

they have been taking big steps in strengthening their competitiveness at both domestic and

international level

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LG’s key sustainability management initiatives are to continue strengthening their

fundamentals with their product leadership, which is a prerequisite for being market leader. It is

likely that they will keep trying to become the market leader.

It is likely that LG will keep their strategy and management style fully aligned with their

customers needs since that is a basic strategic move in order to have product leadership and keep

their customers satisfied which is important for a differentiated company. They will likely keep

on securing their “differentiated product leadership” by fully aligning their thoughts and actions

with the market and consumers, constantly innovating and generating new ideas. It is evident

they have the strength in their Research and Development department in order for them to keep

this strategy as they have innovated many differentiated products in the consumer electronics

industry, such as the first phone with a Bluetooth headset, and the first full LED 3D TV.

A major part of LG’s strategy includes strengthening their Corporate Social

Responsibility. As mentioned before from their research and development through purchasing,

production, and sales and after sales services they have already been improving their corporate

social responsibility execution. For the next years it is likely that they will keep on improving

and focusing on their CSR management to enhance their brand image.

LG will continue to focus on building strong partnerships with stakeholders as mentioned

before, since that has been working to grow their brand image and brand awareness. This will

help grow a sense of brand loyalty, which is a major threat whenever a company is able to

generate strong brand loyalty in an industry as saturated as consumer electronics.

It is also likely that they will keep on implementing their customer-value creation and

people-oriented management. These are basic management philosophies that insure that they will

accomplish their business activity goals, as mentioned before.

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These successful management strategies pose a major threat to Sharp, as they are

generating a strong base of loyal consumers and employees, and a wider net of brand recognition

coupled with a good brand image. These threats attributed to LG’s brand name combined with

the facts that they have a strong Research & Development department constantly innovating in

the industry, and they are consistently pulling out strong profits makes it likely LG will make an

attempt to innovate a new market segment by innovating an existing technology that they have,

as they have done most recently with TV’s. A likely product they might develop is a portable Air

Conditioning Unit, that is light weight and collapses into an easy to carry way, but at the same

time is powerful enough to easily cool down an average sized room. They would create this with

the technology they’ve worked on in the Air Conditioning market segment for several decades,

and leading it from 2000-2007, as discussed earlier in their historical analysis section.

Competitor #2 - Panasonic Corporation

Note: All information in this section is deducted from information in previous sections.

It is likely Panasonic will continue to restructure their business to make a stronger

consumer electronics company over the next three years, as they have recently began doing since

hiring new management in June of 2012 as mentioned earlier in the competitor’s management

section of this report. Then at their fiscal year end date, March 2013, they announced their new

plan to eliminate unprofitable businesses, cut costs, and restructure their marketing. This is a

appears to be a shift in strategy from differentiation to best-cost as they are working on cutting

costs in their value chain, and eliminating products that had run their product life cycle and are

now dogs; otherwise known as products with a low market share, and showing low market

growth. In addition to the cost cutting, their restructuring of their marketing is focusing more on

the diversity of their portfolio.

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A shift in strategy has company-wide effects. This has strong chances of saving the

company as they are just coming off a year in which they earned a negative ten percent profit

margin. Panasonic needs to identify which products are not selling well, and in which the market

growth for that product is minimal. This negative profit margin is largely attributed to high costs

as they were making enough revenue to exceed their total assets as evidenced by their asset

turnover discussed earlier in the report.

These factors point to a need to cut costs. Now that they are outsourcing research and

development, and manufacturing in order to reduce fixed costs, and direct costs. Along with a

restructured marketing division and the cutting of dog products Panasonic should see an extreme

drop in costs, therefore a strong increase in profit within the next three years. This is going to

give Panasonic a stronger financial position, with more money to Research and Develop new

products, and market their stance in the Consumer Electronics market overall will strengthen,

increasing their threat of either taking over an existing market, or innovating a new market

before Sharp. However, Panasonic is not in a strong position to do this before Sharp, as it will

take several years for Panasonic to recover from the debt they have incurred by consistently

reaching a net loss as discussed in their financial section.

Panasonic does not have the cash reserves to continue sustaining a ten percent net loss.

Therefore, if they do not correctly identify the costs that can be cut and cut them, they will be

driven to file for bankruptcy within the next three years.

Panasonic has successfully marketed their solar technology, and is well known amongst

businesses for their solar technology. It is likely this will be a major part of their strategy moving

forward in which their Research and Development team will attempt to find a way to reduce the

high costs attributed to installing alternate energy. This poses one of the largest threats to Sharp.

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If Panasonic identifies a way to cut costs on solar technology the market will boom fast, and

Panasonic will have the first mover advantage, and possibly a patent on the technology to cut

costs. It was identified earlier that the factor holding back the alternative energy market from

booming is the high costs that come with the initial installation of alternative energy.

Panasonic innovating this market segment and developing a patent on how they are able

to cut costs with solar technology could completely shut Sharp’s Energy Solutions down unless

Sharp is able to differentiate from Panasonic by offering higher quality alternative energy. This

type of technology is not expected until oil begins to run dry, but Panasonic has the ability to

speed up the process with their current knowledge in the solar technology field and their strong

research and development department known for constantly creating new products for the

consumer electronics industry.

This strategy is an offensive strategy that would put Panasonic out in front of competitors

when they innovate a part of the market before their competitors and earn a first mover

advantage.

Competitor #3 - Samsung Electronics

*Note: All information in this section is taken from information in previous sections.

It is likely that Samsung Electronics will continue to build on to and improve on the

successful company that they have already produced over the next three years. Samsung has

become one of the financial market leaders in the consumer electronics industry. Over the past

three fiscal years, and dating back further than that, the company has had continued growth in

their net sales. Their net income has also increased with every passing year. As a company,

Samsung has a strong current ratio which means that they can cover their current liabilities with

their current ratios. Compared to the industry average, they are exceeding expectations. Samsung

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also has a very strong acid-test ratio which means that even taking their inventories out, they are

able to pay their current liabilities with their current assets. Further, the company’s debt ratios

including debt to equity and debt to assets ratios are very low when compared to competitors

across the industry. This is beneficial to Samsung because this shows that Samsung’s creditors,

lenders, and suppliers do not have as much invested in the company as shareholders do or that

assets cover. The company’s profit margin ratio is also secure when compared to others in the

industry which means that as a company Samsung has good control of its costs. All of these

ratios have been positive and continuously growing from fiscal year 2011 to fiscal year 2013.

This provides some evidence that the company will continue to be a market leader with its

growth.

Since Samsung Electronics is a market leader and has such a strong hold on their

financials, the company has the ability to be flexible with some of their spending and costs.

Samsung recently made an acquisition of Smart Things which will only benefit their company

from the sounds of it. Sharp has the option to spend some of their funds on marketing strategies

which can help some of their campaigns that they have going. Over the next three years,

management will probably spend money on making sure the Smart Things acquisition is

properly integrated into all aspects of the company. This means that it will be heavily marketed

and all the right markets will need to be targeted. Therefore, there will be a significant amount of

time, money, and strategy just being placed into this acquisition. With everything that Samsung

Electronics has gotten into just within the past decade, a significant amount of money will be

spent on attacking competitors with ads and campaigns to let consumers know that Samsung’s

products are the best the market / industry has to offer.

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As mentioned before Samsung will probably keep with their two different pricing

strategies as it has been working well for them. With their skimming price, charging higher than

heir competitors since they have a sustainable competitive advantage over their competitors.

With their competitive pricing strategy, basing their products prices with their competitors’

prices is a good thing since a lot of their products they sell their competitors have similar

products so they will have to keep with this strategy in order to have advantage since they are

one of the biggest and most recognized brands in the industry. Samsung during the next three

years will have to keep their pricing strategies in order for them to keep having the competitive

advantage over their competitors.

With their promotions, they will probably keep doing the same with their advertising, as

mentioned before mainly with their special offers and discounts and the company’s pull strategy.

Samsung uses their advertising to pull their customers to their products but also push the product

to the customers through sales and promotions. They will probably keep giving special offers

and discounts to its trade partners to motivate and influence them to sell Samsung products over

their competitors. During the next three years they will probably keep up with these promotions

since they have been working for them, giving them a big market share.

Over the next three years, costs will probably be cut throughout the supply chain of

Samsung Electronics due to everything that has been done within the past couple of years in the

company. There is no need to have everything in the supply chain, so costs can be eliminated and

focused somewhere else where they would be more beneficial in the company. One area where

costs and money will probably be focused towards is research and development. Samsung

Electronics is always looking for new and innovative ideas, so management is going fund ways

to get those ideas first before their key competitors.

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Competitor #4 - Sony Corporation

It is likely Sony is going to begin focusing on their movie and music studios over the next

three years more than their consumer electronics side of business as that has been their most

profitable area in recent years. Sony’s CEO Hirai believes upcoming Spider-Man movies and

other movies based on PlayStation video games will increase revenue by 36% over the next three

years.(1) This has been a major source of revenue for Sony recently with the past two Amazing

Spider-Man movies each grossing over $700 Million at the Box Office.(1) At least one spinoff,

the Sinister Six, is being planned along with others being rumored such as a female Spider-Man

spinoff, and even an origin story for Spider-Man’s Aunt May in which she is a spy somewhere in

the 50’s-70’s.(2) In addition they are betting big on their upcoming movies based off of the video

games Uncharted, Assassin’s Creed, God of War, Sly Cooper, Ratchet and Clank, and the Last of

Us.(3) These are all in varying degrees of development, with some coming out in less than a

year, some have been in development for years, and some have just been announced. Sony is the

only console manufacturer to have a film business. The record of success has been minimal with

video game to movie adaptations, but with the recent trend of video games being created with a

more cinematic approach, there is a strong likelihood of success for future video game

adaptations, which is what Sony is openly hoping for. Before getting in too deep with turning

games into movies, Sony should pick the most popular game available and the game that they

will bring the most revenue. Using this as an experimental test run to see how id this market is

worth the time and money of getting into. If the movie does well proceed with making more

games into moves, if the movies fails drop the idea and go back to the drawing board to find

another area to increase revenues. In addition, entering into this industry can be pretty difficult

when considering one of their biggest competitors is going to be Disney.

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Sony has managed to create a large portion of its revenue from its exclusive deal with the

band One Direction for concerts, and music discussed earlier. Sony took on a significant amount

of loss in 2011 and 2012. In 2013 Sony was finally able to generate a profit after the first

Amazing Spider Man movie. Sony’s management has plans for revitalizing their consumer

electronics business, but is going to focus on the successful movie and music parts of their

business first to create a stronger company as they currently have a low asset turnover. This is

part of their plan for creating a foundation for revitalizing their Consumer Electronics business.

To help generate more revenue Sony should make more exclusive deals with popular artists since

the deal with the band One Direction went so well for them. By teaming up with popular artists

through exclusive deals could open a very good window for the company promotional wise and

research and development wise. Promotional wise because the company can use these popular

artists as spokespersons for their products and say that the celebrity actually uses the product.

Also, Sony could have their logo put up around the events centers where the concerts are taking

place in easily visible areas for fans to see. Popular people that are in the public eye often is a

great way to market products. People will literally buy products just because that one particular

person is using that product. If this person is very popular with the public then this could mean

outstanding revenues for the company endorsing the person wearing their products. And through

research and development Sony could experiment new innovated products on the artists and see

how they like the product and ask for feedback on the product and if they would make any

changes.

Sony has recently put a lot of money into research and development for medical

equipment. This is a market that Sharp is also focusing on as an area for major future

development, but the growth is far away. Entering this market could be a great opportunity for

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Sony and could end up being very beneficial in the long run. There will always be a demand for

medical equipment in around the globe. If Sony can produce state-of-the-art medical equipment

with today’s advanced technologies that can compete with the already existing marketing, then

Sony will have a very good chance at becoming one of the top companies in this industry. To

even better their product the company should think of adding features to their products that will

differentiate them from their competitors and give them a competitive advantage. A good way to

promote thee product would be to donate their newest medical equipment to some the top

medical institutions in world and have then institution give them feedback on their products. This

feed could include things such as: did they or did they not like the product, was the equipment

useful and relative to the procedures they practice, and are there any feature that should be added

to the product. Also, by donating this medical equipment to these institutions will create positive

feedback for Sony and will catch the attention of the public and other institutions. By gaining

this attention should make consumers more interested in their products and will most likely

increase the sales of the product. Also, to start with a positive image can go a long ways, if

company has well known positive reputation the better their chances are to attract customers.

Sony is dissatisfied with the speed of their decision-making and the execution of these

decisions and has plans to improve. This could create a quick shift in strategy in the future that

could pose a threat to Sharp. Unless a major shift in strategy does happen for Sony, they will not

pose as much of a direct threat in the next three years. Once they create a more financially strong

situation, they will pose more of a direct threat to Sharp. However, that threat is likely more than

three years away, as their focus is shifting away from consumer electronics for the next three

years.

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2. Identification of Competitive 3-Year Strategy for Sharp Corporation

A. Discussion of Which Generic Competitive Strategy is the Best Fit for the Next 3 Years

The competitive strategy of a company is important to the overall success of a company.

A company’s strategy deals with management’s plans that they have for competing against key

competitors. As discussed in class, there are five different strategies that companies can choose

from to pursue to help with the success of a company. The five different types of strategies

include a low-cost provider strategy, a broad differentiation strategy, a focused low-cost strategy,

a focused differentiation strategy, and a best-cost provider strategy. Each strategy provides a

different advantage that could be beneficial to a company depending on what they are looking

for based on their plans for the future. After carefully reviewing and discussing the various types

of strategies that are available for companies to pursue and use, it would be in Sharp

Corporation’s best interest to strengthen and improve on the best cost provider strategy that they

currently have in place over the next three years. A best-cost provider strategy is a hybrid of

strategies and offers customers more value for their money while still satisfying buyer’s

expectations on quality, features, performance, and service attributes and still beating some price

expectations. This competitive strategy fits what Sharp is best set up to do for over the course of

the next three years.

In part two of the current analysis, Sharp Corporation’s current strategy was discussed.

Their current strategy that the company has been implementing over the course of its business

has been a best-cost provider strategy. The last few fiscal years have been a struggle for Sharp

Corporation, however we believe that with their most recent fiscal year financials the company

will be able to strengthen their best-cost provider strategy which will strengthen them as a

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company overall and give them the advantage they need to continue to operate in the consumer

electronics industry.

In fiscal year 2012, the company had a current ratio of 0.73, a debt to equity ratio of

1448%, a debt to assets ratio of 93.54%, an asset turnover ratio of 1.05, and a profit margin of

negative 22.00%. These financials for the fiscal year 2012 were the result of a plant shutting

down temporarily, which caused a halt on the production of LCDs, one of Sharp’s largest

product lines. This was discussed earlier in the paper. The fiscal year 2012 was the second year

that the company sustained a net loss. After the second year of net losses was recorded,

management went through a change with a new board being implemented. The new board

decided that in order to get Sharp Corporation to stop producing net losses, changes needed to be

implemented across the company. Those changes were going to start with management.

Top-level management deemed fiscal years 2014 and 2015 as the “regrowth stage” for

the company. After the changes that were implemented, Sharp Corporation seems as though they

are on their way to figuring out what it takes to get back on the right track. For fiscal year 2013,

all of their ratios improved from the previous year’s results. When compared across the

consumer electronics industry, as discussed in Section 2, Sharp Corporation fared relatively well

and matched the industry average for many of their ratios for fiscal 2013. For fiscal year 2013,

the company made it a point to improve their sales. In order to do this they realized that they

needed to make some changes to their products. They updated their Quattron Pro televisions with

HD capabilities to modernize them and also equipped their smartphones with their latest LCD

technology. Sharp also placed their latest LCD technology in their solar cells and small and

medium sized LCDs. By updating their best selling products with enhanced features and up-to-

date technology, Sharp was able to improve their sales for fiscal 2013. This is turn helped their

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cost of goods sold ratio improve and gave them a high gross profit to work with. In the end, the

company was able to pull out a net profit for the year.

By working off of the most recent fiscal year’s success, Sharp Corporation can continue

this best-cost provider strategy into the next three years, which they have deemed their “regrowth

stage”. Over the next three years the company could work on implementing and changing a

variety of things that would help to improve their business model and strengthen their position in

the consumer electronics industry. The company can start with improving their overall business

foundation. This can start with the financial aspect and then work its way out from there. Sharp

should concentrate on reducing its inventory. We performed an inventory turnover ratio analysis

in Section 2, and the results were good. The company is turning their inventory over at a decent

rate every year. This simply means that they are not holding onto their inventory for long periods

of time and storing it in their warehouses. However, there is room for improvement. When

compared to other companies of their size, Sharp can work to improve on this ratio so that their

inventory numbers are not as high as they are. As a company, Sharp also needs to work on

reducing and restricting the amount they are investing in capital expenditures every year. These

investments are driving the values up on the balance sheet, and it is extra investments that Sharp

cannot afford to have right now during the regrowth period. It was discussed in section 2 that

Sharp’s cost of goods sold is consistently high when compared to their net sales that they are

bringing in every year. The high costs are bringing gross profit down to the point where the

company has a minimal amount left to pay expenses. Over the next three years the company

should focus on making radical cuts in their overall costs. This could be in the form of cutting

jobs or even cutting back on what they are spending money on in the way of production in their

plants.

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Sharp should continue to focus on producing products with their latest technology. This

means that they should continue investing in research and development because if Sharp falls

behind on the latest trends, then they will not be able to keep up with the industry. The company

should invest time and money into figuring out what the next step or use for the LCDs could be.

LCDs are their largest selling product and they have incorporated them into a majority of their

products. By doing this, it gives Sharp an edge because their LCDs are high tech and innovative.

By finding a new venture to utilize their LCDs in, Sharp could be looking at possible success.

The company could work to find products of their own that could utilize LCDs and build off of

that, or they could find other companies with products that lack LCDs and need them to enhance

their products. This would form a potential partnership and could be beneficial for both Sharp

and the other company.

Sharp should also look into the energy solutions sector of their business model. Not many

consumer electronics companies specialize in energy solutions and Sharp has created products

throughout the years that have peaked an interest in energy solutions. Throughout their history,

Sharp Corporation has changed different aspects of their company to become eco-friendly and

environmentally safe. As discussed in section 1, they implemented their 3G, 1R strategy of

Green Mind, Green Factory, Green Product, and Recycle to have everyone in the company focus

more on the environment and being green. A majority of their factories were changed to green

factories and everything that could be recycled, was. Many products that were produced became

green and eco-friendly. Sharp even created some of their own innovative systems to help with

green technology, which included their own purification system that they placed in a variety of

their air purifiers and home appliances over the years. When LCDs became their big focus,

energy solutions went to the side even though they maintained their 3G, 1R plan. Sharp should

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work to renew their energy solutions business over the next three years because it would make

them a market leader and would give them a competitive advantage in the industry. Sharp could

develop new products and systems that incorporate some of their innovative technology of today

to utilize energy systems. This could potentially create a whole new line of products for the

company and in the industry, which would definitely give Sharp a competitive advantage above

its key competitors in the consumer electronics industry.

If Sharp Corporation focuses on continuing to improve its financials by lowering its costs

of goods sold and inventory, and restricting specific investments that they make each fiscal year,

then the company will continue to produce a net income from year to year provided that they

increase their net sales as well. By investing money in research and development to better

improve on current products and create new ones, Sharp’s customers will be getting more value

for their money and Sharp will be getting the expectations of quality, performance, and service in

their different products. By restructuring the way that their cost of goods sold is and cutting back

on different cost the company is using, Sharp could beat some price expectations that other

companies in the industry cannot. By doing all of this over the next three years, Sharp will be

able to continue to implement, improve, and strengthen on its best-cost provider strategy that it

currently has in place, giving Sharp Corporation an edge in the consumer electronics industry.

B. Identification of Offensive Strategies to Exploit Against Competitors and Which

Competitors You Will Use Them On

Sharp’s offensive strategies should be widespread. They need to begin with a focus on

research and development to draw sales and market shares away from less innovative rivals;

specifically attacking competitive weaknesses of rivals. Samsung is the biggest competitor and

poses the biggest threat in all their market segments. They’ve succeeded in differentiating as the

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other option to Apple in the smartphone market. They are also the leaders in the LCD TV market

that Sharp once lead. Sony is taking their focus off of the Consumer Electronics division

exposing a weakness in the console market that they share with Microsoft. Panasonic and LG

have shifting strategies and are financially weak. Panasonic relies on their TV and cameras as

well as their solar panel business, while LG is reliant on their TV and Phone products.

These strategies also include leapfrogging competitors by being first to market with new

technology, by deliberately attacking market segments where Samsung and Panasonic make big

profits. In order to do this they will need to adopt GoPro’s technology through the partnership

they need to develop.

The proposed strategy begins with the partnerships discussed previously in the

supplemental strategies section. Sharp’s Research and Development must begin by creating an

all-in-one TV and game console with a camera built in. This product should utilize the special

GoPro motion camera technology to track the user much like the Xbox Kinect except built into

the TV. In addition, the LCD technology Sharp has spent decades researching will help to

shorten the time it takes to integrate this new technology into their current TVs. This product

adapts GoPro’s technology and takes advantage of Sony taking their focus off the console market

by creating a gaming console that is a part of their TV, working as an all-in-one TV and console.

This will specifically take away from Sony’s console market share, and all competitors market

shares in the LCD TV market, especially the market leader, Samsung.

Part of the research and development process must involve identifying if it is possible to

integrate PlayStation and Xbox games into their new console both legally and logistically. If it is

not possible then Sharp must begin approaching current game makers to start producing their

games in Sharp’s console format. They should start with major industry leading games that come

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out when the console comes out, such as Call of Duty, Madden, and whatever the big release is

at the time.

In addition to the new TV product, the marketing campaign for Sharp’s Energy Solutions

is a direct attack on Panasonic’s current market leading abilities discussed earlier in this paper.

Sharp must provide a complete energy upgrade to their second partnership at cost, and then use

the marketing campaign they generate together to make Sharp’s Energy Solution business well

known as the alternative energy provider.

In addition to the marketing for their Energy Solutions business, Sharp will announce the

new TV-Console product at the biggest gaming convention, the E3 convention, where all the

biggest new gaming technology is announced every year, and then launch a full marketing blitz

campaign to get the word out about their new product. These should be in quick succession to

surprise Sony.

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C. Identification of Defensive Strategies to Protect Competitive Advantage from Other

Industry Participants and Which Participants You Should Implement Them For

The plan for defensive strategies is to revolve around forced obsolescence. This would

not be a strategy made public, but the general idea is to have a shortened product lifespan for

their TV-Console. Where PlayStation and Xbox have continued increasing life-spans, Sharp

should introduce an updated version of their TV-Console once every two to three years. This will

defend against competitors taking too much of the spotlight off of Sharp’s console. It will be

imperative that Sharp not anger their consumers by making their old discs obsolete, just the TV-

Console product itself. This can be done by keeping the same disc working for each Console, but

with improved features with each new model. The new product will be announced in a press

release to combat anybody trying to copy the idea.

In addition, Sharp will expand their LCD TV product line to new unique sizes. These

unique sizes will be offered with the all-in-one TV-Console as well in order to prevent

competitors from trying to attack the new product as having a lack in variation of size. The new

product must target both the gamers from the game console market. At the same time Sharp will

need to market to non-gamers so that those just looking for LCD TVs will find advantages to

having the motion camera built into their TV to help with tasks while watching TV such as

changing the channel, volume, input, and other various TV tasks with motion detected by the

GoPro camera technology.

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D. Discussion of General Timeline to Implement Offensive and/or Defensive Strategies in

Next 3 Years

Year One:

Year Two:

Year Three:

E. Discussion on Other Potential Supplemental Strategies

Other potential supplemental strategy that Sharp should engage is a strategic alliance. A

strategic alliance is an agreement between two or more separate companies in which there is

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1. Create partnership with Go Pro2. Create partnership with company that uses a lot of Energy for Energy Solutions

Business3. Shift recent profits and marketing funds to research and development4. Begin Research and Development on new TV-Console project5. Have Legal Team Identify Legality of integrating Xbox and PlayStation discs

into new Console

6. Begin construction of energy saving technology for new partner and finish by the end of the year.

7. Announce the new product at the E3 convention8. Finish Research and Development of the new product half way through the year9. Begin shifting funds from Research and Development back to Marketing10. Begin early stages of marketing campaign for new product.

11. Drop Research and Development funds and shift them to Marketing12. Begin marketing campaign with partner on Sharp’s Energy Solutions13. Create a major marketing campaign to run for the three to four months before

the TV-Console release14. Release the new TV-Console in the beginning of Sharp’s fourth quarter15. Begin research and development on the next generation TV-Console to be

released in the next two to three years

strategically relevant collaboration of some sort, joint contribution of resources, shared risks,

shared control and mutual dependence.

The first partnership we came up with is with GoPro, that is an American corporation that

develops and manufactures high definition personal cameras, often used in extreme action video

photography. GoPro sales have more than doubled every year since the first camera’s debut in

2004 (1). In 2012 the company sold 2.3 million cameras and grossed $521 million (1). For the

month of December in 2013 GoPro was the highest-grossing digital imaging brand at Best Buy

knocking out Sony for the first time in the chain’s history (1). With this partnership both

corporations would benefit from each other. With this partnership both companies will have

technological improvements. For GoPro we would introduce to them Sharp’s LCD technology,

so they can add them to their cameras and other products. As for Sharp, GoPro would help them

in the camera department, for example Sharp could incorporate a webcam with the GoPro

technology into their televisions. GoPro would benefit from Sharps expertise in technology,

since Sharp is a company that has been in the consumer electronics industry for more years than

GoPro. They would specially benefit from their LCD technology which is what Sharp has the

most expertise on and have one of the best quality LCD technologies available. Sharp would be

the only company with a partnership with GoPro. Partnering Sharp and GoPro would bring

many benefits to both of them; it will only improve each company’s technology for the better.

We came up with another partnership idea for Sharp; they need to find a company who is

heavily reliant on energy such as Google. The idea is to replace what the company does with

their energy and use Sharp Energy Solution products, such as their geo thermal energy, wind

energy, and solar cells. The idea is that Google would create an ad campaign and get Sharp

Energy Solutions out to the media. Google would fund the campaign and we will give them a

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discount with our products to replace all the energy they use. The ad campaign has to be a big

campaign in order for Sharp Energy Solutions to get known around the world and so they can

improve in their sales. With this partnership both companies will benefit from each other, Sharp

having Google use all of their products to replace their energy and they will fund an ad campaign

and bring that sector of the company out to consumers. Google will benefit with Sharp since they

will be replacing their energy with Sharp’s products in order to save energy in the future, making

it a good investment for Google. Both of the ideas we came up for partnerships will benefit every

company involved and will make Sharp grow as a company and get more consumers involved

with their products.

3. Identification of Relevant Issues Concerning International Markets and / or

International Suppliers

Sharp Corporation is an international company that employs a global strategy. This is a

think global, act global mentality where the company utilizes the same strategy worldwide no

matter where they are operating in the world. Sharp’s management had to decide if the different

segments that they were marketing to had local variation or not. This meant that the company

had to decide if their products would have to be altered to tailor each market they were targeting

or if they could just use the same product universally. After researching their different markets,

Sharp decided that their products did not have to be manufactured to fit each market.

Management decided that a product could be the same worldwide and there would not be an

issue. Sharp Corporation treats the world essentially as one market and one source of supply with

very little, if any, local variation (4). The company’s competitive advantage is developed largely

on a global basis, versus locally (4).

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In 2006, consumer electronics companies had to provide documentation that showed their

equipment complied with the European Union's Restriction on Hazardous Substances law which

restricts the use of lead, cadmium, mercury and three other substances in electronics equipment

(5). If companies did not comply with this law, they were assessed fines and sometimes not

permitted to sell products in European countries. This issue has come up again in 2014, except

with companies that have operations in the United States of America (5). Starting in 2014,

electronics companies that operate in the United States will have to show that they are complying

with the mineral regulations under the 2012 Dodd Frank Wall Street Reform and Consumer

Protection Act (5). This law requires companies to disclose of products that contain any form of

tantalum, tungsten, tin, or gold that was mined in the Democratic Republic of the Congo or other

countries in Africa (5). The reason for this is because rebels in the Democratic Republic of the

Congo have used proceeds from conflict minerals illicitly mined in order to fund their various

war efforts (5).

By making it so that Sharp Corporation has to comply with both of these laws,

international issues arise because Sharp has to make sure that they are disclosing everything on

an international level that meets other countries’ standards. For examples, Sharp has to make

sure that everything complies with the Securities and Exchange Commission when reporting for

the United States laws. This can create issues across the markets because there are differences

between the two markets and if one reports something that does not mean that the other

necessarily reports it.

Everyday imports and exports can cause issues across international markets and

international suppliers. This is with any consumer electronics company that operates on an

international basis. Sharp Corporation will have issues with international markets concerning

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their imports and exports because regulations are always changing regarding imports and

exports. When regulations change, the imports and exports of companies also change because

companies always need to comply with regulations. International standards are different across

countries so when countries change their regulations, it requires that all countries comply to

make sure imports and exports are legal. Taxes and tariffs are also changing constantly across

international markets; therefore Sharp has to comply with the different currencies of the different

markets that they operate in. This can cause monetary differences between countries, which can

become an issue for finance purposes.

Since Sharp Corporation utilizes an international global strategy, where they produce the

same product worldwide no matter what market they are in, the company has to deal with

potential issues that arise with international markets and suppliers. These issues include

complying with regulatory laws that get passed in other countries, imports and exports, and

changing taxes. With all of these changing constantly, Sharp Corporation has to be ready for

international issues that could surface at any time.

4. Brief Discussion of Functional Policy to Accommodate Strategic Plan

A. Discussion of Strategic Policy Relative to Finance / Accounting

Over the course of the past three years, Sharp Corporation has shown different results on

their net income statement. For fiscal years 2011 and 2012, the company recorded significant net

losses that amount to billions of yens in losses for the company. For fiscal year 2011, the

company sustained a 376 billion yen net loss, while in fiscal year 2012 the net loss was even

more substantial totaling to a 545 billion yen net loss. However, even after sustaining those two

significant losses in back to back years, the company was able to overcome that and achieve a

net income of 11 billion yen for fiscal year 2013. This significant change in direction had to do

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with a change management after 2012, as well as a new direction for the company, which was

discussed in previous sections. Overall, changing the products of the company and enhancing

products with LCDs and HD capabilities boosted net sales, which in turn gave the company what

it needed to produce a net income for 2013.

As a result of the most recent financial statements and fiscal year results, we have

decided that the company should maintain a similar financial path / approach for their company

with a few changes. Sharp Corporation should continue to update their products with the latest

technology because this increases sales, which the company needs. Sharp needs to focus on

retaining more cash and cash equivalents. The balance is this account has decreased steadily

every year for the past three fiscal years. By doing this, the current asset amount decreases

meaning there is less liquid assets to pay off debts in case something were to happen. The

company should work on continuing to decease their inventories. By doing so, this means that

the company has a better inventory turnover rate and that there is less product sitting in their

warehouses. Also, in general the company should decrease their inventory supply because the

more they produce and manufacture the more it costs, which is driving up their costs of goods

sold and then driving down their gross profit. The company’s machinery, equipment, vehicles,

and other account has been slowly decreasing over the past couple fiscal years. This is good for

the company because that means there is less money wrapped up what they are investing in their

property, plant, and equipment. The company should continue to lower this cost because it will

help bring down costs on what they are spending to run the machines, vehicles, equipment, and

any other fees associated with them.

Two liabilities accounts that Sharp really needs to focus on decreasing over the next three

years are their short-term borrowings account and their long-term borrowings account. These

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two accounts alone caused the debt to equity and debt to assets ratios to be as high as they are.

The creditors and lenders of Sharp have invested more in the company than anyone else which is

evident by these two accounts alone. By focusing on bringing these two accounts down over the

next three fiscal years, then the company will be able to draw back more investors which have

dropped off significantly and will also improve their ratios in the company overall. Sharp

Corporation should also focus on bringing down their trade payables and accrued expenses

accounts. These two liabilities accounts are also relatively high and are causing significant debt

for the company. By focusing on paying these debts off in the next three years and keeping the

balances down, Sharp will be able to focus on new investments and will not have to worry about

paying old ones off.

Overall, Sharp Corporation should focus on increasing their sales over the next three-year

period, which will include enhancing their products so that they can continue to sell them at high

volumes. The company should work on lowering their cost of goods sold so that their gross

sales / gross profit remains high enough from year to year to pay off debts and expenses they

owe. Lastly, Sharp should work towards maintaining a net income because if they do not, they

will not be able to compete in the consumer electronics industry against their key competitors.

Sharp should make it a point to invest money in research and development over the next

three years because they need keep up with the industry and changing trends. The consumer

electronics industry is competitive and Sharp’s competitors are all working to develop innovative

products. Sharp should incorporate their innovative technology, LCDs, and energy solutions

lines to achieve something that the industry has never seen before. In order to do this, the

company needs to invest the money in it. Over the next three years, we believe that this should

be done because we the benefit to Sharp will be huge in the end if they find it to be successful.

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The current financial and accounting policy of Sharp Corporation works well for the

company, and does not need to be changed significantly. If the company incorporates a few

changes over the next three years to the policy then Sharp will have the edge in the consumer

electronics industry and will have stronger financial statements to prove their position.

B. Discussion of Strategic Policy Relative to Marketing Strategy

In the next three years Sharp Corporation’s marketing division will be put on a very slim

marketing budget. For the first year the marketing division will suffer a loss in budget while the

research and development will receive a bump in funds. This should occur so the company can

develop new products with more advanced technologies and better features to better attract

consumers to their products. By giving research and development a boost in their funds should in

return help the company produce these better more appealing products. The second year

marketing will almost be non-existent so research and development may put a full on push to

produce more products with advanced technologies and produce more products for the marketing

division the following year. In the third year the marketing department’s budget will increase by

150% and will put on a full marketing blitz to market all the new products and new technologies

that the research and development team had developed over the past 2 years.

Also in the next three years LG Electronics and Panasonic Corporation are planning on

moving to a best-cost (value strategy). A best-cost strategy is a company that wants to provide

their consumers with a low-cost product, bet yet satisfying their consumers through the quality,

features, performance and service of their products. Both of these companies are moving from

broad differentiation strategy, which Sharp is moving in the direction of. Broad differentiation

strategy is when a company offering something unique to their products, which, differentiates

them from their competitors, but at the same time, is appealing to wide range of consumers.

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Sharp Corporation will be able to do this through some very key partnerships; the most

important partnership being with GoPro. Go pro is looking to add a LCD screens to their

cameras, and who better than to design and produce those screens than Sharp. On the other side

Sharp is in the market for a camera company to design and produce a camera they can be

mounted directly on their TVs. GoPro makes some of the best compact cameras available on the

market and their product would be exactly what sharp is looking for. The deal would work for

both companies, Sharp uses GoPro’s technology to improve the quality of the camera and GoPro

uses Sharp’s technology to better their screens for their cameras.

For the third year the plan is to bring a new to product every year, by forcing the products

to have newer and better technologies available for consumers. One of these new products will

be a highly technologically advanced TV. The announcement of the TV will be brought to the

public eye in the second year at E3 convention in June. And the final product will be released at

the end of the third year. As mentioned previously, Sharp is looking to team up with GoPro to

develop a camera to be mounted on a TV; that is exactly what this TV will offer and so much

more. The Camera itself will be a huge selling point for the TV. The camera will be equipped

with motion sensors to follow the person around the room up to a certain distance and will also

have the capability to take pictures. The main use for the camera is to be used as a webcam

through networks such as Skype. Now instead of the consumer sitting in front of their computer

to use the webcam all they have to is turn on their TV. But in order for all this the to happen the

TV will come with WiFi availability to connect to the consumer’s internet. The idea of mounting

a camera to the TV is to take market shares away from Sony who is losing focus on the

consumer electronic side of business. Also to attack the Sony even more Sharp will develop a

gaming console or partner with another gaming company (not Sony) and will have that gaming

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console built into the actual TV itself. This will also give sharp a huge advantage over Samsung.

By being the first company to incorporate the newest features into our TVs, Sharp will be able to

surpass Samsung in the market share holdings for consumer electronics in relation to TVs.

To promote this state-of-the-art TV, Sharp will attend gaming festivals such as the E3

convention (one of the largest gaming conventions in the world) where the initial announcement

of the product will be made. The following year the physical product will be revealed at this

same convention. For the new product the company will set up a booth where visitors can come

and play their favorite games on the new TV. The consumers will be able to test out all the

features of the TV at this event and will hopefully persuade the consumers to go and buy the new

product. In this gaming promotion Sharp could partner with a popular game such as Call of Duty

and release the two products around the same time. Or Sharp could just use the game as

promotional deal where if you buy the new sharp TV the consumer gets a free copy of a

particular popular game. By doing this sharp would use a bundling strategy by grouping two

products together. The promotional campaign will travel to popular events globally involving

new technologies to expose the company’s new product. Another promotion Sharp could run is

to have this new TV the center of attention in retail stores they distribute to. Have the display set

up with couches around the TV so that the TV is the center of attention along with a movie

playing and furniture to give the customer a feeling as if they were sitting in their own home.

And for the gamers, have a display set up where the customers can play the newest most popular

games to play on Sharp’s newest top-of-the-line TV. Another big promotion that will be ran for

the TV is commercials and advertisements. To start out theses advertisements will be minimal

due to budget restraints, but during the year these advertisements will be largely increased to

broaden consumer awareness of the new product.

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As to where Sharp should continue placing their products in the market should be the

ASEAN region. As said earlier in the paper the ASEAN region is the region expected to grow

the most in the demand for consumer electronics for years to come. So sharp should be the first

company in these nations distributing their products to gain brand name customers, become a

commonly known name, gain a competitive advantage, and gain loyal customers who will keep

buying their brand named products in the future. The ASEAN region will be the main focus for

the company when researching and developing new products since this region will have the

highest demand for the products Sharp is offering. Since Sharp has already begun building the

largest manufacturing plant in this region (Indonesia), so mass-producing products to keep up

with the demand of products in this region should not be a problem for the company. Also, since

the company now has this manufacturing plant here the company is already a step ahead of its

competitors in this region.

For promotions in the ASEAN region Sharp will begin developing advertisements to be

aired on TV to promote campaigns, sales, new products, and special offers. Since the demand for

consumer electronics in the ASEAN region is increasing, more consumers here will have the

opportunities to now see these advertisements. Sharp will also keep its existing promotion of the

dance to the festival promotions. This is where people dress up in certain outfits and dance and

sing to whatever festival is being played on Sharp Television. This promotion is based on

festivals that take place in the local cultures and can be directly related to the people of this area

very easily. The promotion works well because it directly relates to people and attracts large

amounts of people to the area where the display is happening, which draws positive attention to

the company’s name and attracts possible new customers

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As for the solar energy division of the company, to be successful it will most likely have

to partner with another company. This company will have to be larger and better known around

the world. Most likely the larger company will purchase the majority of Sharps solar energy

division, Sharp will have some stake in the business, but the larger company will have majority

of the interest. By joining with a larger company the two can combine funds and do more

promotional campaigns to get their products and name recognized around the world. By doing

this the two companies could run a promotion informing consumers how important it is use

environmentally friendly energies and make them more aware of how the energy sources we are

using today are damaging the environment. For example Sharp could partner with Google to

make their name more recognized around the world in the eco-friendly industry. Google would

run and pay for the ad campaign and return Sharp would make Google’s building more

economically friendly at a discounted price. Sharp alone associating their name with Google will

in return strengthen their brand name and make it more well known name to the public.

C. Discussion of Strategic Policy Relative to Management Strategy

Sharp’s strategic plan needs a couple of things in order to make the company more

successful through the years. With their management team they will start increasing efficiency

and continue working for the company’s goals. As mentioned before they implemented a

Medium Term Management Plan in which they used 2013 as a restructuring stage and 2014 and

2015 was for the re-growth state.

For them to accomplish their target they came up with three strategies as mentioned

before which are to shift to advantageous market and fields, exit closed innovation and

aggressively use alliances, and enforce executions by innovating governance system. They will

accomplish all of these by restructuring their business portfolio, choosing which products are the

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best ones for the company, which of all the products bring them profit or will bring in the future.

They also are improving profitability in their LCD business which is big for them, since they are

one of the best company’s in the LCD business, so they are going to keep promoting and selling

their LCD’s. They will increase profitability especially since they have dedicated one entire plant

to the production of their LCD screens for Apple. As mentioned before they are going to invest

about 35 million yens in the current LCD business for this year. By having Apple as one of their

customers and investing that money they will have a big return and it will help them with the

increasing in profitability for their LCD business. Sharp also wants to focus on expanding

businesses focusing on the Association of Southeast Asia Nations, which is an association of ten

countries in Asia. By expanding to those countries their business will grow and they will gain

more consumers. They also want to reduce fixed costs by introducing all-company cost

restructuring innovation. They will have to find a way to lower their fixed costs finding costs that

are high and that should not be high. Also finding other options for their fixed costs that are

cheaper in order to save more money and improve their financial situation.

As mentioned before for the three-year strategy, Research and Development and

Marketing budgets will be changing. The first year R&D will have a good budget in order for

them to innovate new products that consumers are eager to try and use. They will have to keep

on focusing on their consumers and looking for what consumers want in order to satisfy them

and attract them to their brand. With a good budget for R&D they will focus on innovating

products for consumers. The second year that R&D budget goes down a little and marketing goes

up, the marketing department is going to step up a little and start marketing new products and

innovations, in order to let consumers know about their innovations and attract them into buying

their products to gain profitability. The third year R&D’s budget will drop and Marketing’s

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budgets will go up in order to do a big campaign for all their new productions. Promote the

steady emerging new products with great potentials to be launched in the market for speedy

business expansion. With the marketing budget the goal is to attack the competitors with Sharp’s

innovations, so that consumers are leaning more to Sharp and more attracted to trying the new

products they are coming up with and add more brand awareness. With more brand awareness

Sharp will gain more consumers, since their competitors have been doing an excellent job with

innovation and brand awareness.

Sharp has to keep on working with their staff evaluation system, consulting and setting

goals twice a year with their bosses. They have to challenge themselves without fear of failing.

This is important in order to keep employees engaged with their work. Also keep them interested

in their jobs and managers have to let them know what they expect from them in order for them

to keep up with their work. With the new Board of Directors Sharp has been improving and will

keep on improving and getting in a better financial position.

As mentioned before Sharp has to keep on appointing outside directors who have

international, multifaceted and compliance perspectives on wide range issues, such as social and

economic environment and the future direction of the company. They do this in order to

strengthen the decision-making functions within the Board of Directors and function for

supervising directors’ execution of duties. With their Executive Officer System, which divides

the supervisory and decision-making functions from the business execution functions, and

creating a structure that steadily facilitates and helps them have an efficient business execution.

By introducing the Business Group system, which corresponds to the specific characteristics of

their businesses, they are making reforms aimed at creating a one-stop management structure that

handles development, production and sales. By having an organized corporate governance

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system the company will have more control over everything and will increase their efficiency,

always making that a positive accomplishment for the company through the years. They have to

keep their monthly basis meeting in order for them to improve their management agility and

flexibility and also to clarify the responsibilities of the company’s management.

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Works Cited - Section 3

1. http://comicbook.com/2014/11/19/sony-predicts-new-spider-man-movies-will-drive- revenue-growth-in/

2. http://www.avclub.com/article/sony-reportedly-considering-spider-man-spinoff-abo- 211708

3. http://uproxx.com/gammasquad/2014/11/sony-is-going-to-be-making-a-lot-of-movies- based-on-video-games/

4. http://www.global-strategy.net/what-is-global-strategy/ 5. http://globalpurchasing.com/blog/electronics-industry-faces-growing-regulatory-

environment

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Contact Information

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Brett BallPhone: 814-706-7564

Email: bball08@lakers.mercyhurst.edu

Brianne SmailPhone: 724-882-9742

Email: bsmail08@lakers.mercyhurst.edu

Kaleb SchwabPhone: 724-816-9693

Email: kschwa04@lakers.mercyhurst.edu

Andrea NovoaPhone: 814-321-4955

Email: anovoa41@lakers.mercyhurst.edu