In October 2001, the consumer electronics giant Sony Corporation pooled resources with the Swedish phone maker, Ericsson, to launch a joint venture – Sony Ericsson Mobile Communications (SEMC). As of 2003, SEMC was still making losses. Despite that both sides had pledged more resources into the venture, the JV’s profits, sales and market share continued to fall and by the end of 2009 SEMC had slashed its global workforce by around 5,000 people. In October 2011, Sony announced that it would acquire Ericsson’s stake in SEMC and turn the JV into a wholly owned subsidiary known as Sony Mobile Communications. The acquisition was completed in February 2012.
What motivated the two companies to forge the JV? To achieve these motivation(s), were there any alternative ways other than forming a JV and why do you think a JV was chosen over these alternatives? What problems the JV has encountered since the formation? Given these problems, do you think Sony’s decision to take over the JV and turn it into a wholly owned subsidiary is a good strategy for Sony? And why?
Search information (e.g. newspapers and other media outlets) relevant to the case and answer the case questions through reference to concepts and frameworks introduced in the lecture program.
The question belongs to Corporate Strategy and it is about the joint venture between Sony and Ericsson. Sony, a Japanese electronics company and Ericsson, a Swedish phone maker came together to form the joint venture, Sony Ericsson. The joint venture later turned into a wholly owned subsidiary of Sony. The reasons that have led the joint venture to turn into a company fully owned by Sony have been discussed in the solution.
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