An Analysis And Case Study About Sony Corporation

Marketing Essay
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Introduction
This assessment is basically an analysis and case study about Sony Corporation. It first briefs the case
study and then it will discuss the macro and micro environment analysis in general and Sony
Corporation in specific. The case study will also explain Sonys SWOT analysis and will evaluate the
strategies followed. Furthermore it will give recommendations for business growth and followed by
conclusions and at the end.

overview of the case

Sony started business by being one of the worlds best performing and innovative electronics company.
It later on failed on meeting customer demands when other companies competing against it and
launched new innovative products. In 2005 Sony decided to change its strategy by appointing an
America citizen to be the head of the Japanese company. This shake-up aimed to get Sony back in
track with a programme of reorganisation cost cutting and reinvention and it was found to be necessary
due to the regular losses and reduction in profits. Below statistics show Sonys losses and profits of
1995 to 2004
2005 profit after tax was USD 2.3 Billion
2004 profit after tax was USD 1 Billion
Losses: Sony consumer electronics division had worldwide sales of USD 47 Billion but delivered a net
loss of USD 339 Million
Other losses: USD 96 Million
Profits: play station sales over 7.5 USD 4.7 Billion and trading profit of USD 650 Million
Sony pictures trading USD 339 Million
Financial services USD 530 Million
Audio products such as walkman, and TV products like the WEGA model, were under major
competitive threat from new digital technology coupled with low-wage labour manufacturing. Sharp
electronics for example is way much advanced in the development of LCD technology. Even Sonys
newly developed laptops; VAIO was competing against Dell and HP with lower production costs.
Main Problems:
Sony strategy has been regarded as too late and with too little innovation. The business at Sony was
becoming more towards management than manufacturing and services.
Over many years the innovation nature of Sonys products delivered it competitive advantage. This is
no longer seen and thus Sony shifted away from innovative products, the reason that caused
fluctuations and profit drop. Another reason behind this fluctuation is that Sony got involved in too
many unprofitable businesses. Competitors have become able to match its products performance at
lower costs and electronics like TVs and CD players were facing increasingly heavy competition, lower

prices and lower profitability. Sonys new strategies focused on moving to low-wage countries and
outsource more work to cheaper countries.
The step down of Sonys chairman Nobuyuki Idei and his fellow board members in 2004 aimed to
accelerate cross-company collaboration by bringing in new ideas, more strategies and alliances.
10,000 jobs were dropped from total workforce of 130,000 and 11 production facilities were closed.
Focus was put on LCD screens, and Playstation 3 semi-conductors business would be examined.
Assets would be sold and products range would be reduced to 20%.
Challenges
Sony believes that will face low-cost economy in Korea, and therefore it must reduce its product prices
to compete against the Korean innovative products.
Sonys management style and strategies need to adapt with consumers demand.
Lack of coordination. There are inventions that are not routed through management. These are
sophisticated products which could easily attract customers.
More focus is to be put on products that are highly demanded by customers and study is to be made on
what electronic items is the market lacking of.

The Marketing Environment.

The marketing environment impacts and surrounds leading the organization. There are three key
perspectives on the marketing environment:

1-The micro-environment
This environment influences the organization directly. It includes consumers and customers, suppliers
that deal directly or indirectly, and other local stakeholders. Micro describes the relationship between
firms and the driving forces that control this relationship. It is a more local relationship, and the firm
may exercise a degree of influence.

2-The macro-environment
This includes all factors that can influence and organization, but that are out of their direct control. A
company does not generally influence any laws it is continuously changing, and the company needs to
be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means
that there is always the threat of substitute products and new entrants. The wider environment is also
ever changing, and the marketer needs to compensate for changes in culture, politics, economics and
technology.

3- The internal environment.

All factors that are internal to the organization are known as the 'internal environment'. They are
generally assessment by applying men, money, machinery, materials and markets. The internal
environment is as important for managing change as the external.

PESTEL analysis of the macro-environment

Political factors. It refers to government policy such as the degree of interference in the economy. Type
of goods and services does a government want to provide. What degree does it believe in subsidising
firms? Political decisions can impact on many very important areas in the business such as the
education of the workers, the health of the nation and the quality of the infrastructure of the economy

such as the road and rail system. Like when the government set the minimum wages for the employee.
Euro currency exchange may drop in the UK making Sony easier to expand.
Economic factors. It includes interest rates, taxation changes, economic growth, inflation and
exchange rates. Change can have a major impact on a firm's behaviour. Interest rate plays an
important role in a company growth and price factor of the product.
Social factors. Changes in social trends can impact on the demand for a firm's products and the
availability and willingness of individuals to work. Customer demand to test the product has increase
so........
Technological factors: new technologies create new products and new processes. MP3 players,
computer games, online gambling and high definition TVs are all new markets created by technological
advances. Online shopping, computer aided design and bar coding are all improvements to the way do
business as a result of better technology. Technology can reduce costs, improve quality and lead to
innovation. These developments can benefit consumers as well as the organisations providing the
products. Because of bargaining power of buyers increase Sony need to provide innovative products to
its customers and different from competitions. Also the increase of use the technology effect production
and marketing of Sony product.
Porter five forces analysis

Bargaining Power of Suppliers: medium

The Firms can find information about suppliers prices and product on the
internet. Internet is global because of that companies can access too
many suppliers all over the world that can choose from them. So Internet
affects the bargaining power of suppliers.
The bargaining power of suppliers in Sony Corporation is medium because it not depends on one
supplier. In addition internet gives different choice of suppliers to the Sony.

Bargaining Power of Buyers: high

Customers can use the internet to find information about different firms product and prices. Internet
gives wide choice to the customers.
Bargaining Power of Buyers in Sony Corporation is high because of high competition .So the
customers have different choice. Also customers can easy switching to buy product with lower cost.

Threat of New Entrants: low

Internet have low cost standard to the entry barriers. It is not expensive like brick and motors store and
it is easy to use. Also internet make easily to business when want to exit than offline store.
Threat of New Entrants in this case is low because the competition high. Capital cost and entry is high.
........, multinational players in the industry have also increased the barriers to the industry. Strong
players in the market Like Sharp, Samsung, Philips and LG

Threat of Substitutes:
Substitute products or services reduce demand by providing the buyers with alternatives. Internet
allows the easy innovation of substitutes. The Competitors online store is just a click away.
The threat of substitutes is high. Sony Corporation competitors are able to match most electronic

innovations and many rivals attempted to source similar products from lower cost sources.

Intra-firm rivalry:
By internet the market is worldwide and large numbers of firms in competition. Internet technology
provides an opportunity to customize services but the cost of attracting the customers is very high.
When the company not differentiated their product from other then it will face price completion.
The competition is high. Sony is international industry. High competition forced Sony Corporation to
reduce their price such as Sharp from Japan and Samsung from Korea.
SOWT Analysis

Strength
Sony ability to be successful in several markets is one of their strength. They have completed an
impact in the video the PC market, game market, and especially the television market and there are still
numerous others. The second strength is brand name. The name Sony appeals is unique and actually
appeals to a large segment of customers in the world.
Sony had greatest human capital, especially its engineers which make up the R&D department. Sony
becomes International Corporation from bringing the capacities and best of strategies together to the
organization.
Weakness
The biggest weakness in Sonys is lack of innovation with PS3. In addition Sonys ability to read
customer demand was still capable of improvement.
High cost manufacturing base.
Lack of team work........................in the organization.
Employees found difficulty to adapt with technology changes.
Japanese company, Sharp Electronics, was much further advanced in the development of LCD
technology than Sony Corporation.
Sony made considerable attempts to reduce its manufacturing costs by relocating its manufacturing to
low-wage labour countries. But had failed to recognise the importance of some of the new technology.
Sony company culture did not always support innovation.
Sonys ability to read customer demand was still capable of improvement.
Sony had developed a new range of laptops called the VAIO with excellent on screen display. But the
company was competing against other companies with lower production costs like Dell Computers and
HP/Compaq.
Sony lost the product initiative on liquid crystal display panels to rival companies such as Sharp from
Japan and Samsung from Korea.
Sony slowed by its top-heavy management structure.
Sony restructured its organization, but could not really improvement it effectively due to the highly
influential Japanese cultures.
Opportunities

While technologies become more complex and accessible, the electronics infrastructure market will
increasingly change with technology and this will negatively and positively affect Sony Company.
Customers today would like to have devices and services that match with the new technology.
Sony Company has formed strategic alliances and merged with other companies in the sector top form
strong competitive companies and it still has opportunities to further these opportunities. ...........
Threats
Cost-cutting, reorganisation, and reinvention.
From technological advanced organisation and operating from low cost economies.
Currency fluctuation.
Low product life cycles.

Evaluation
Generic strategy
Sony had followed many strategies to achieve their goals and objectives for example generic strategy,
Direction of growth and method of growth.
According to Porter (1985) competitive advantage arises from selection of the generic strategy that
best fits the organizations competitive environment and then organizing value-adding activates to
support the chosen strategy.
In generic strategy, As Porter argued that a business must choose between the cost leadership and
differentiation strategy. Sony Corporation start use differentiation strategy then follow cost leadership
strategy. But when they want to combine they stuck in the middle because lack of innovation. They
spend a lot of mony in research and development.
(Differentiation) It turns to fast growing market for mobile telephones. Developing new robot toys
(Cost leadership) Move production of some of its more standard electronic products to low wage
countries.

Direction of growth
Sony have came out with new product which is (Sony online Service) that will eventually let users
download music, television shows, movies and games from the companys extensive library onto
gadgets like computers, Blu-ray players, televisions, game consoles and digital cameras by doing
business online that will allowed Sony to become online business and entering new market that mean
Sony used two directions of growth that are diversification strategy and product development strategy.
The advantage for use of diversification strategies to Sony is to spread the risk. Sony is not totally
dependent on one product, industry or market. Large seasonal and cyclical fluctuations in demand for
the existing product make Sony diversify in order to balance out sales. Also, improve company image:
because diversification can bring name and goodwill to Sony since it serves a wide cross section of
customers in the market and also gains wider dealer support due to its diversified range of product and
hence higher market power. Sony had used product development strategy to attract new customers,
retain the existing once and to increase market share and to maintain Sonys image as product
innovation. In contrast diversification strategy disadvantage are lose the focused in single product,
slow growth and high risky.

Method of growth

Sony used organic method of growth .Sony have own suppliers and distributors. They have diversifying
into a different industry, which related to the current industry that the organization is in. By add product
and service which related to organization knowledge and experience. They have introduced Sony
online service in terms of the technology.

Approach to strategic management

Sony is in core competency approach. Some companies in the same industry are more successful
than it. Like Sharp and Samsung. Sony needs to concentrate more on changes in the ............
Recommendations

Market Development:

One direction that Sony could possibly take is concentrating more on customers demand. At present
the customer has much more choosing power and competition of other companies is high. Competitors
are also able to manufacture duplicate items in shorter periods besides offering them to customers for
cheaper prices.
To create larger profit margins, it is important that Sony concentrates more on the business sector,
supplying high technology equipment and parts to industries. This would enable Sony to use its unique
talents in video games and semiconductor technology to create its office version in future and also
make it less dependent on coming up with a solid stream of relatively short-lived hit products.
Approach is product development:

Internally, more cooperation should take place between the Research and Development groups. The
product lines should be made more compatible with one another via transparent and cooperative
communication between groups and managers to build brand loyalty for consumers, i.e. projects
should be routed to all and should not be hidden. Also, products should be made with added value and
longer life time rather than having frequent changes in models, and hence shifting from a manufacturer
oriented to consumers oriented mindset.
Generic strategy
Sony is seen to be repeating history. When the Japanese took over the US market through cheap yet
quality goods, other Asian countries such as Taiwan and South Korea, with their low labour
cost followed suit and they now pose as great competitors to Japanese firms and Sony in particular.
Japanese firms should therefore be more competitions in setting up high technology standards and
shorten the technological lead time over the Asian firms in order to gain maximum profits. Cost cutting
can also play a good factor in winning customers and improving profit margins. In short they need to
follow hybrid generic strategy.
In addition to Japan, Sony also has spread divisions in the United States and other parts of Asia; by
this set up Sony can take advantage of the cheap labour and hold a head start against growing
consumer markets.
Functional ..........
Sony Corporation needs to learn more from their competitors to achieve the needed growth and

competitive advantage in the future. To reach that goal Sony must look to the new technologies that are
there in the market and how they can develop or produce a new product. For example; the new digital
camera for Sony cyber shot is the new revelation with touch screen. Also, the new LCD Television with
the help of Samsung Company in South Korea will raise the profit to the company.
Moreover, the company should see their product life cycle and like the laptop batteries problem and
trays to fix it or develop a better once. Also, they should expand their branches to help the customers
get the warranty privilege when any manufacturing problem happens. Then it comes to the promotion
and advertising they should focus not only to inform the customers for the product but also to create
brand preference through differentiation and expend the company market share.
Method of growth:
They need to follow inorganic strategy because of speed changing in environment. In addition
inorganic is faster than organic strategy.
In conclusion:
Although there are copycat firms that are taking share and profit from Sony, the major aspect of Sonys
success is the innovative spirit and pursuit to excellence which cannot be copied. Sonys main
objective is to focus on integrating its many talents against the increasing competitive market.