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This report will establish the opportunities and threats presented to Sony by the EU market.

Extracts from this document...


VOCATIONAL A LEVEL IN BUSINESS UNIT 22 ASSIGNMENT THE EUROPEAN UNION & UK BUSINESS AIM: You need to investigate a UK business, which trades across the EU. The report will cover the following aspects: * Opportunities & threats presented to the business by the EU. * Positive & negative impact of monetary, competition & social policy. * Impact of cultural difference. Sony Plc, a large company that operates in many markets and trades within the European Union and outside, is the company I'll be reporting on. 2.1) Introduction: This report will establish the opportunities and threats presented to Sony by the EU market. Also how the positive and negative impacts of monetary, competition and social policies affect Sony and the impact of cultural difference in this multinational company. Part of this report will be done with effective presentation of material by using a variety of formats that will show a good use of evidence that I have collected. 2.2) Underpinning economic theories: a) Economies of Scale; results in the firm gaining from a reduction in the average cost per unit manufactured, so total costs will increase as production increases but average costs of production can fall, leading to the firm becoming more competitive. A chart to show production costs and production scale. Cost per unit Economies of scale are outweighing diseconomies Diseconomies of scales outweighing economies Lowest cost production There are five main economies of scales: Bulk-buying economies: Large orders are more profitable to the supplier, so the larger the order the larger the opportunity cost of losing market power because firms who place large orders have significant market power. Technical economies: As firms grow they have more ability to invest in technology because using more machinery and less labour saves cost due to the fact the machines reduce the quantity waste of raw materials this then cuts variable costs for the firm. ...read more.


Impact on Competition Policy The competition policy is there to protect competitors from anti- competitive behaviour and strengthen laws governing cartels. The Competition policy was produced in 1980. It is the concept of an anti-competitive practise and is based on four Parliament Acts. ? Fair trading Act 1973 this deals with monopolies and mergers. If the Secretary of State believes there is a monopoly situation that exists or proposed merger because the company has 25% or more of the market she would refer the case to the MMC. ? Restrictive Trade Practises Act 1976 this is concerned with agreements between firms that might limit their freedom to operate independently. In another word is that companies cannot fix prices to benefit themselves and not the public interest. ? Resale Prices Act 1976 this act says it is illegal for firms to set minimum prices at which there dealers or retailers can sell goods. Also to withhold supplies or to offer less favourable terms to a dealer who supplier believes to be price-cutting. ? Competition Act 1980 this prohibit businesses to restrict, distort or prevent competition. Sony is apprehensive about this policy due to them having a turnover of more than 10million but not 25% of their market share in EU (Sony have about 20% of the EU market share) because they know that they will be fined 10% of turnover, which is a gross amount of money loss for Sony. So for this not to happen Sony employ Lawyers that are based in Berlin at their Headquarters and make sure they comply with all these rules. The competition policy has had huge effects on Sony that is why many of Sony's policies had to be changed to collaborate with the competition policy. For instance, Sony can encourage shops to do what Sony want by offering goods at cheaper costs but Sony can't control prices or refuse to supply a shop that discounts Sony's goods. ...read more.


This will be done by placing this strategy in employee's mind through training and when recruiting new staff in the induction stage. Even though it is expensive to accomplish, it would benefit Sony greatly because as they have this in mind it will enable them to increase the quality of their productivity and stay very competitive against their rivals. Another strategic decision for Sony, which needs to be accounted for is cultural differences. This is because it is a major factor, which will affect Sony when producing goods for the EU market which is made up of over 300 million people. Even though these countries can be placed into clusters due to their socio-economic similarities it would help for Sony to understand that this is important because different clusters have different preferences and in order for Sony's goods to be sold they have to cater for these tastes. So the Human Resource Department Managers will have to find managers in each cluster in order to implement this operational change. These mangers are obviously from the different countries because they have a clearer understanding of what individual nations desire to purchase. This then ensures that the market which Sony is producing to are being satisfied and turnover is increasing to create greater profits. This may conflict with the Finance department because they feel that creating these managers will increase expenses. Due to wages needing to be paid and training off or on the job has to be accounted for also market research will need to be done to know what products each culture prefers because it is their responsibility to make sure less money is spent and more is made. But if Sony stay product orientated it will make them a lesser contender for domination in the electronic market and that approach will just aid other competitors to gain Sony's loyal customers. So I strongly advocate Sony to imply this strategic change. All the EU countries are developed but at different stages. So a strategic solution has to be for Sony to target certain products at certain countries. ...read more.

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