Monthly Archives: September 2014

With the dominance of Apple and Samsung in the smartphone industry, Sony has announced that it expects a loss in its mobile business this year, contributing to an expected annual loss just over $2 billion. It is the first time since 1958 that Sony has cancelled dividend payments. Dividends are payments made by a corporation to its shareholders as a distribution of profits. This is a key factor as we had just learned the basics of accounting principles in our last lecture. A company not being able to pay its shareholders dividends, after many consistent years, shows a significant loss in company revenue. The company plans to cut staff in its mobile communications business and to focus on its high-grade smartphones along with the introduction of a SmartBand fitness device. However, with Apple’s release of the iPhone 6 and iWatch, as well as the expected release of Samsung’s Galaxy S6, it will prove extremely tough for Sony to compete in the smartphone industry. Sony needs to create a product that is significantly different from its competitors in order to entice consumers to purchase their products. Otherwise, Sony may have to direct their smartphone resources to their TV, camera, audio, and video game businesses in order to increase their market share.

Sony Xperia ion LTE Smartphone

Sources:

Elaine Kurtenbach, “Beleaguered Sony predicts $2.1 billion loss as smartphone future falters,” The Vancouver Sun, Sept. 17th/14

1,000+ dead. 2,500+ injured. These numbers are the direct result of unsafe working conditions in third world countries; more specifically, the collapse of the eight-storey Rana Plaza factory in Bangladesh. “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits” – Milton Friedman [1]. In this case, costs were cut for production in order to maximize profits. By producing product out of the Rana Plaza, companies such as Loblaw, Joe Fresh, and Primark, were able to spend the least amount possible on wages, facilities, and production costs. One day prior to the collapse, the factory was evacuated due to the appearance of cracks in the wall, yet workers were still instructed to re-enter the building and continue working. Loss of time affects production which in turn affects profit. This places pressure on factory managers to keep production moving in order to satisfy the needs of large corporations. When businesses make self-interested choices that benefit shareholders, but don’t promote the social interest, ethical issues arise. The three main companies involved made a bold gesture in acknowledging that their companies had product being produced at the factory and have offered support where possible. With that being said, it’s unfortunate that something this tragic had to occur in order to realize that business ethics and the welfare of stakeholders must be taken into consideration; not just shareholders.

Rana Plaza Garment Factory

Sources:

Marina Strauss, “Canada’s Joe Fresh among brands made in collapsed Bangladesh building,” The Globe and Mail, Apr. 24th/13

Unknown Author, “Bangladesh factory collapse toll passes 1,000,” BBC News Asia, May 10th/13

[1] Milton Friedman, “The Social Responsibility of Business is to Increase Its Profits,” Corporate Ethics and Corporate Governance – Page 178, Online Document, January 2007