Abstract
The Sony Corporation is a multinational conglomerate of Japanese origin. It is headquartered in Konan Minato, Tokyo Japan. This particular company has diversified its business through the production of multiple products and services. The main products produced by Sony include professional and consumer electronics, entertainment, gaming, and financial services. Sony’s vision is to create products that meet the imaginations of everyone and produce gadgets and devices that stimulate senses and rejuvenate the spirit. It strives to come up with ideas full of surprise and that never disappoint the consumer. The company is one of the major players in the home electronics industry. Its products are of high quality and the brand resonates with consumers from all regions of the world. For this reason, the company has gained a lot of revenue making it one of the most profitable. However, competition from other major players such as Samsung, LG, Apple and Huawei are forcing the firm to focus on a smaller range of products to enhance specialization and value.
Introduction
This paper is an analysis of the Sony Corporation. It highlights its comprehensive strategic profile by performance, strategy, objectives, needs and finances. Within the essay are models of frameworks and concepts used to analyses the business. It discusses three critical themes drawn from the company profile. Furthermore, it expounds on the implications of each of the three themes on the organization’s current and future strategies.
The main aim this report intends to achieve is to develop a critical awareness and understanding of strategy and its relevance in business. It also showcases how a strategic profile can get used to evaluating implications of strategic decisions within organizational and cultural contexts. Through learning these aspects, we get to learn the value and importance of critical thinking. It helps managers to apply proper decision making in the implementation of sound business strategies and policies.
Strategic Profile
Nature and scope of business
The Sony Corporation is a multinational conglomerate of Japanese origin. It is headquartered in Konan Minato, Tokyo Japan. This particular company has diversified its business through the production of multiple products and services. The main products produced by Sony include professional and consumer electronics, entertainment, gaming, and financial services.
The corporation forms the electronic business unit and acts as the parent firm of the Sony group. Sony has four operating segments. The electronic segment which is the largest consists of video games, business, medical and network services. Motion pictures segment includes movie production and documentaries. The music section is mainly involved in the production of software and tools for music creation. Finally, the mobile department deals with mobile phone production.
Electronics- In this segment, the company deals with audio, computing, photography and video. Audio devices include the Discman, headphone, CD players and the famous Walkman. These devices were of high quality, and they became very popular in the 1990s. They made the brand to stand prominently among its competition. From the CD players to the Walkman, these devices had quality builds and a high level of durability.
The computer segment began in 1994. Sony manufactured high-end laptops that were very efficient and had the high processing power. These computers had the brand name VAIO. Though they had high quality and longevity, they faced stiff competition from more established brands such as Dell, Hewlett-Packard, and Toshiba.
Photography gadgets mainly possessed the Cybershot brand. These are high-quality cameras with powerful lenses. Most of them fetch premium prices and are popular with many photographers and filmmakers. The quality of the pictures they take is outstanding and gives great satisfaction to the consumer.
When it comes to video technologies, the Trinitron brand was one of the favorites. This brand mostly got used on television sets. These appliances were those that used the cathode ray tubes. Their build quality was quite high and had good picture quality as well. However, this brand got discontinued. The CRT technology became obsolete. Sony then embarked on LCD technology under the brand name WEGA. Sony WEGA televisions were those of the flat screen type. They ranged from the smaller 21 inch TV sets to the gigantic 52-inch sets. The WEGA brand also got discontinued. The LCD brand that the company has adopted of late goes by the name BRAVIA. Current LCD technologies include LED and OLED. These provide much better quality and vibrancy of pictures.
Mobile- The mobile section is mainly composed of the Erickson brand. This brand came about as a merger between the Swedish company Ericsson and Sony. They produced phones by the name Sony Eriksson. These phones however faced stiff competition from the likes on Nokia, Alcatel, and Samsung. Soon afterward, this brand got replaced by the Xperia franchise at the dawn of the smartphone. These are mid to high-end smartphones that fetch premium prices.
Interactive Entertainment- Sony interactive entertainment involves the production of video games. The most outstanding one is the PlayStation. In 1994, Sony released the first PlayStation console. This gaming device took the video game industry by storm. Soon after, the PlayStation 2 followed which had better graphics power. The PlayStation three had even more outstanding developments. The latest device is the PlayStation 4 which is the bestselling video game ever.
Music- Sony music involves services aimed at giving consumers easy access to music. These are online platforms that allow users to easily download music and even stream them over the internet. Sony pictures focus on production of television programs. They also produce film and documentaries.
Finance- Financial franchises under Sony include Sony financial holdings. They provide a myriad of financial services. They provide credit to customers. They also offer banking services. Sony life is monetary service offered in Japan and the Philippines. Customers can make their savings in this institution. Their money also earns interest at favorable rates.
Company vision
The pursuit of infinite possibilities
Mission
Their unlimited passion for technology services and content including the relentless pursuit of innovation drives it to deliver new excitement and entertainment in ways that are unique to the company.
Everything they do is to move the customer emotionally
Internal analysis of the company
Accounting Ratios-
The operating profit marginal account ratio obtained in 2002 was 0.018. This return on stockholders’ equity reflected only 0.006 and returns on total assets revealed a meager 0.002. The high investment rate did not represent a corresponding growth in profitability. These poor results might show that the firm had failed to manage some aspects of its operations properly. Mismanagement leads to losses that are both visible and invisible.
The debt to asset ratio was high in the previous two years. This also shows that the company is hugely leveraged and faces the danger of bankruptcy if the creditors suddenly demand repayment for their debts.
Finance-
Sony Corporation is endowed with massive financial backing. It has the necessary resources to continuously build a vast international infrastructure which provides users with the desired diversity. This forms a strategic advantage competitively. New entrants are not able to attain this merit. To expand internationally, they would require huge capital investment which is not possible for a startup.
Physical resources-
Sony invests heavily in infrastructural development. The aim is to gain enough capacity to fulfill growing needs and demands of consumers. Human needs are unlimited and insatiable. Therefore, companies must continuously invest in good infrastructure. In 2001, Sony started a joint venture with Eriksson. They partnered to manufacture mobile phones. The Sony bank also got established as an internet based bank for Japanese investors.
Tech resources
The Sony Company was a pioneer in some market sectors. The Trinitron, Betamax, Walkman, camcorder, MiniDisk and the PlayStation were all innovative products first launched by Sony. Other companies came up with different brands, but the fact remained theta they borrowed the idea from Sony. The devices created new markets and avenues for the company to exploit. Therefore, the ability to leverage on new technologies earlier on ahead of its competition enabled the 14 creation of high quality and innovative products.
Human resource management
The company can motivate and improve the productivity of their staff. They have a framework that encourages regular communication between employees and management concerning work contributions. This policy forms one of the strengths of the company. It helps in establishing the basis of a compensation system that correctly evaluates contributions of each employee.
External analysis
Political
Government policies are important drivers for the success of a country. The late 1990s saw increased privatization and deregulation of consumer electronic industries. Media technology institutes also got increasingly privatized globally. Many nations thus formed free trade agreements. All these factors enabled Sony to expand globally and become a strong multinational company.
Economics
In the 1990s, globalization created market interconnectivity. The interconnectedness allowed broader access to foreign products for both companies and consumers. This situation helps to fuel demand for consumer products countrywide.
Socio-cultural
Goldman Sachs conducted a survey. They revealed that 60% of Americans played video games. 61% of the surveyed were adults. Furthermore, 43% were women. Similar trends also got witnessed in Europe and Japan. These were mainly those who grew up playing video games. According to these gamers, price and quality were the two most important considerations.
Demographic
The world’s population currently stands at around 7 billion people. This number is expected to increase with the rapid growth in the population now witnessed globally. Furthermore, the average disposable income over the last 30 years has steadily increased. The increase in global labour force means that people have higher purchasing power. They can spend on more products. In addition to paying more, they have the ability to access more premium products due to their economic empowerment.
Technology-
Internet telephony has enabled easy communication over vast distances. With Sony’s xeric range of smartphones, consumers can easily communicate and share experiences through social sites. Online banking services provided by the firm enable many people to get easy and convenient access to their funds wherever they are. They do not need to contact a physical bank.
Sony market share
Sony makes one of the largest corporations in Japan by revenue. In 2012, its revenues were up to 6.439 trillion yen. Furthermore, it maintains large cash reserves with over 895 billion yen on hand as of the year 2012. Sony shares got valued at 15 billion US dollars in 2012.
In the 90s through to the early 2000s, Sony was highly profitable because of its successful PlayStation franchise. In the mid to late 2000s the company faced some financial difficulty due to the global financial crisis, competition from microdot’s Xbox and the Nintendo Company. In 2000, Sony had a total market capitalization of 100 billion us dollars, but by the end of 2011, the revenues plunged to 18 billion us dollars. The following table showed Sony’s sales and distribution by geographical region in 2009.
SWOT analysis
Strengths
The company has an established brand. In 2011, it got recognition as Asia’s most valued brand.
The company is known for its technological excellence and quality. It is also rich in technological expertise as it helped in the development of the magnetic recording tape and the blue ray disc among others.
The PlayStation has always had success since inception up to the present.
A strong presence in the entertainment industry helps offset losses in consumer products
Weaknesses
High cost of media production affects the firm’s pricing tactics
Too much diversification into different segments has shifted forces form the core competency which is the production of consumer-electronics. This distorts the brand.
Opportunities
The firm can capitalize on the movie and business industry along with the vast experience in the gaming industry to provide high-value content to strengthen the brand.
The buying off of Sony Ericson should offer the firm an opportunity to become an independent player enhancing innovation in the lucrative smartphone and tablet industry
Opportunities abound in the healthcare imaging market segment through probable acquisition of a stake in Olympus
Threats
Price competition from LG and Samsung
The Apple television can shake Sony’s LCD market share
The online network has the vulnerability of attack by hackers.
Porter’s five forces
Threats of new entry:
The consumer electronics industry typically needs vast capital investments to achieve profitability. Economies of scale and continuous innovation proves another challenge to new entrants in the market. Government policies also act as entry barriers for new companies. However, for the Sony Corporation, this threat remains minimal. The company is already established and has a huge portion of the market share (Porter, 2008)
Bargaining power of consumers:
For the Sony Company, its buyers have high bargaining power. The cost of switching to new products is almost zero. Information technology has provided consumers with a myriad of options.
Supplier bargaining power:
This company has a global network of suppliers. Thus, they have no upper hand over Sony. They are a smaller entity and the firm negotiates with them directly.
Substitute products:
Sony has a variety of unique products. They thus have very few to no substitutes. Sony has quality products and its customers are loyal. Therefore, the threat of substitute products is low (Piercy & Giles, 1989, pp. 5-7).
Rivalry intensity:
The rivalry in the industry is extremely high because of cutthroat competition and high costs of exit. There are many players in the industry such as Philips, LG, Samsung, Toshiba and Apple. All these rivals are competing for the same market. They also produce high quality products at par with Sony (Karagiannopoulos, Georgopoulos & Nikolopoulos, 2005, pp. 66-76).
Stakeholders
The company’s stakeholders include the employees, shareholders, suppliers, media, potential investors, educators, financial institutions and government agencies. All these players aim to enable Sony to produce innovative products without compromising quality and reliability. Shareholders are the primary financiers of the company. Financial institutions provide loans and also act as a storage facility for revenue. Government agencies create laws that regulate operation procedures of companies. They also oversee the adherence to taxation schemes and financial integrity.
Strategic themes
These are specific business themes that provide strategic indicators which highlight changes to the enterprise plan. These plans affect a particular goal’s portfolio. Inputs to this process include the mission of the business, competitive environment, financial objectives and constant portfolio context. The three major themes in the business are as follows:
Focus on a younger demographic
The youth is known for their vitality and creativity. For this reason, they need products that will match their desires and needs. These needs are numerous starting from entertainment to productivity and lifestyle. Most of the world's population is composed of the youth. They are increasingly becoming a major market segment. Most of them like to express themselves in their unique styles and fashions. Through focusing on the youth, Sony can tap into their imaginative minds and come up with outstanding products that will meet all their needs. The youth is also tech savvy and more connected that any other generations. They use the internet in their daily lives for many activities. The integration of cloud systems will ensure that a larger youth market gets tapped. Cloud gaming is picking up momentum an in the coming years will become a mainstream entertainment and interaction avenue.
Fewer products
Sony has embarked on an aggressive program to trim down its scope of products. The company wants to focus on fewer specialty products. This strategy will enable the company put most of its efforts in areas it is good at. This action will allow them to produce high-quality products that will enhance the brand name and take the company back to its glory days.
The company no longer seeks growth in business areas with intensive competition. This situation puts Sony at a disadvantage. Other brands already have a strong foothold in such industries.
An Example is the smartphone industry. These markets have got dominated by players such as Samsung and Apple. They also produce high-quality products. Samsung, in particular, provides products that cater for people from all social classes from the budget oriented to the lovers of premium products. Budget smartphone manufactures such as Huawei and xiaomi also provide cut-throat competition. For this reason, Sony intends to shift focus to more profitable avenues. Such include camera sensors, the PlayStation franchise and other forms of digital entertainment.
Product and operational support
Conclusion
The Sony Corporation is one of the biggest and most profitable companies in the world. Its products are popular among all demographics. The plan to focus on a smaller specialized market will drive their profitability upwards. They will produce high-quality products that will enhance the brand name. Customers will get satisfied and its slogan “Be Moved” will indeed move the masses.
Bibliography
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Karagiannopoulos, G.D., Georgopoulos, N. and Nikolopoulos, K., 2005. Fathoming Porter's five forces model in the internet era. info, 7(6), pp.66-76.
Piercy, N. and Giles, W., 1989. Making SWOT analysis work. Marketing Intelligence & Planning, 7(5/6), pp.5-7.
Porter, M.E., 2008. The five competitive forces that shape strategy.
Scribd. (2016). Strategic Analysis on Sony. [Online] Available at: https://www.scribd.com/doc/43406139/Strategic-Analysis-on-Sony [Accessed 13 May 2016].
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Appendix
Appendix 1: Sales and distribution by geographical region in 2009
Key:
Japan
United States
Europe
Other areas
Appendix 2: SWOT analysis
