Strategy Coursework – Sony Corporation

Essay, 2010

17 Pages, Grade: 1.0


Table of Contents


1. Competitive Analysis of the Industrial Current Status of Sony
1.1 Porter's Five-Forces
1.1.1 The Threat of New Entrants
1.1.2 The Bargaining Power of Suppliers
1.1.3 The Bargaining Power of Buyers
1.1.4 The Threat of Substitute Products or Services
1.1.5 The Intensity of Rivalry Among Competitors in the Industry
1.2 SWOT Analysis
1.2.1 Strengths
1.2.2 Weaknesses
1.2.3 Opportunities
1.2.4 Threats
1.3 Value-Chain Analysis
1.4 Resource-Based Analysis
1.4.1 Intangible resources
1.4.2 Tangible Resources
1.4.3 Organizational Capabilities

2. Impacts of External Forces on the Competitive Advantage of Sony
2.1.1 Political
2.1.2 Economic
2.1.3 Social
2.1.4 Technological
2.1.5 Environment
2.1.6 Legal

3. Recommendations of Future Strategic Decisions of Sony

4. Conclusion



After the financial crisis hit the global economy in 2008 many global companies found themselves in economic distress. To remain competitive and successful, it is vital for any company to be aware of their status quo and its future strategic direction.

Sony is a global company that operates in over 204 countries. According to Howard Stringer (CEO of Sony), Sony’s mission for the future is to become a leading global provider in the sector of network consumer electronics, entertainment and services. Sony wants to challenge its designers, engineers and producers to improve their hardware as well software in terms of innovation in order to further the differentiation process towards its competition.

The purpose of this report is to analyze Sony’s current situation within the electronics industry by assessing its macro- and micro-environmental factors in order to offer future strategic recommendations for the Corporation.

1. Competitive Analysis of the Industrial Current Status of Sony

1.1 Porter's Five-Forces

1.1.1 The Threat of New Entrants

Within the electronics industry, there will be a high level of investment required in order to match existing competitors such as Sony. With many major brands established and with considerable market share, it is unlikely that any new entrants will be able to overcome the brand and corporate identity that have been established to retain customer loyalty. The patents that Sony possesses are also a strong barrier itself as it denies any competitor from developing similar products without some form of arrangement (i.e. licence).

1.1.2 The Bargaining Power of Suppliers

Sony Corporation has been the market leader in the electronic industry, with the ability to provide long-term contracts with its suppliers. With such a high corporate identity and a global network of business units, the bargaining power of suppliers towards Sony are greatly reduced as the company can either create its own supplier or switch to another.

1.1.3 The Bargaining Power of Buyers

The increasing use of the internet providing better communications amongst consumers has shifted the bargaining power towards the buyers. With comparison sites, blogs and impartial review websites easily accessible, Sony has to ensure that their products are of high quality and offers superior specifications in order to ensure that the general perception of are favourable to ensure the acceptance by the consumer markets (Bearne, 2008).

1.1.4 The Threat of Substitute Products or Services

There have been many examples in the past which demonstrates the need to stay innovative within the technological industry. The release of more interactive games on the Apple iphone is one threat of a substitute product to Sony’s Playstation Portable (PSP) (Martin, 2008).

1.1.5 The Intensity of Rivalry Among Competitors in the Industry

With strong competitors such as Samsung and Panasonic, the battle for market shares across their vast range of electronic products is very strong. However, Sony does have a significant advantage over its competitors by diversifying its range of products to include the gaming, movie and music industries.

However, with such a large range of products, there has been an increased number of competitors within specific industries which has forced Sony to respond. One example of such a conflict lies within the LCD Television market against Samsung. Sony sold 15, 2 million LCD Television units worldwide and thus increased its sales by 43%, giving it the second largest share of in the global market (Sony Annual Report, 2009). Other examples of fierce rivalry include the Nintendo Wii leading in the gaming and the Fujufilm’s 3D camera in the emerging 3D industry.

1.2 SWOT Analysis

1.2.1 Strengths

One of the most outstanding strengths of Sony is its great brand image with a brand value of US$ 12,438 million calculated by Interbrand (2009) and is ranked #3 as Japan's best global brand of 2009 . The company has managed to instil the perception of quality and reliability to the global market, which is a valued competitive advantage particularly for new innovative products where the brand image itself would be sufficiently to attract early adopters and increase the diffusion rate towards the wider markets.

The vast diversity of products and business operations is another strength that Sony possesses. By expanding their business operations, Sony has been able to stabilise their revenue each year as they are not "over dependent on a particular product or service segment for revenue generation" (DATAMONITOR, 2009).

The ability to cross-market as a result to this is another strength that Sony can use through its strategic direction of obtaining content for its electronic devices, such as the inclusion of the Spider Man 2 movie (Sony Pictures) in Blu-ray format with its new Playstation Portable (PSP) (Gunter, 2006).

1.2.2 Weaknesses

Jobber (2007) had stated that Sony had become "complacent to the changing needs of the market" due to its previous successes and has allowed competitors to consume a large portion of its market shares. Jan Vardaman (2009) had stated that Sony Corporation had in fact developed a concept similar to the IPod, but fear of cannibalising the Walkman had led to the barriers to product development. The poor organisational mentality (i.e. lack of initiative and slow responses to market trends) are characteristics which CEO Howard Stringer is desperately trying to eradicate from the culture of Sony. As Siklos (2009) stated, "The culprit in nearly every case has been Sony's tradition-bound mentality …too focused on building excellent analog machines in an increasingly digital world."

Another weakness of the Sony Corporation, addressed by Stringer, is the lack of synergy between business units under the umbrella of Sony. Stating that "the bridge between content and hardware is software, and that was something we didn't master" (Gunther, 2006). Business units creating the same products, different chargers for different Sony electronic devices are lack of coordination that Sony has suffered which has cost them unnecessary expenses and waste of human resources.

1.2.3 Opportunities

One opportunity is to enforce a more integrated and synergized corporation with the wealth of businesses it possesses. One example of this strategy taking place is the integration of Sony's electronics and video games operations, which has been predicted to increase the production and innovation within the industry (Szalai, 2009).

Another opportunity that has been recognised by Datamonitor (2009) is Sony’s partnership with FIFA that runs till 2014. This is a great opportunity for Sony to enhance its corporate image towards a massive global audience. Sony’s agreement with FIFA also includes the exclusive rights to broadcast 25 matches for ‘fan fest’ in seven major cities (Pennington, 2009).

This partnership has also allowed Sony to utilise its upcoming 3D technology, with the use of its 3D cameras and the release of its 3D electronics to view it(Ault, 2009). The 3D technological industry is one in which Sony is aiming to gain a large market share, where it “aims to finally meet its cherished profitability target in three years” (McCurry, 2009).

1.2.4 Threats

However, brand value has been falling as a result of the changing perception of consumers within the last 5 years. The brand image of its products has slowly shifted from what was once deemed as 'cool' to become overtaken by smaller, innovative companies. Keene and Mahr (2005) highlighted one of the factors leading to the fall in Sony's brand image, which was the lack of initiative towards the mp3 player industry leading to its loss of significant market share towards Apple.

On the gaming front, the Nintendo Wii and the upcoming Microsft Xbox’s project Natal on the horizon, it does appear that the Playstation 3 may soon face heavy competition with motion sensing technology which has opened up the market for game consoles (Simons, 2009). The Nintendo Wii had successfully sold over 20 million copies more than its competitors as its games (i.e. Wii Sports) are suited for ‘casual’ gamers such as family members and children (McCormick, 2009).


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Strategy Coursework – Sony Corporation
The University of Surrey
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sony;, porters five forces, pestel, swot analysis, value chain analysis, resource based;, surrey, strategic management, university of surrey
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Raphael Städtler (Author), 2010, Strategy Coursework – Sony Corporation, Munich, GRIN Verlag,


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