Ali Tehraninasr 1071200112

Reza Sigari Tabrizi 1071200031

Payam Ansari 1071200084

Supervisor: Dr. Anisah Multimedia University , Malaysia

Savvyentrepreneurial firm

MMilestones of ilestones of Sony Sony

MMilestones of ilestones of Sony Sony

Sony todaySony today

“Sony is one of the most important companies in the world of business”

Product Range

•TV & TV & Audio EquipmentAudio Equipment •Mobile PhonesMobile Phones & Music & Music

•ComputerComputer •Game ConsolesGame Consoles

•Movie & Movie & Video EquipmentVideo Equipment•Financial ServicesFinancial Services

Electronics Industry AnalysisElectronics Industry AnalysisPorter’s five forces modelPorter’s five forces model

(a framework for analyzing a particular industry)(a framework for analyzing a particular industry)

Threat of New

Entrants

Threat of Threat of New New

EntrantsEntrants

Porter’s Five Forces Porter’s Five Forces Model of CompetitionModel of Competition

Threat of New Entrants Threat of New Entrants (Low)(Low)

Barriers to Barriers to EntryEntry

Government PolicyGovernment Policy

Economies of ScaleEconomies of Scale

Product DifferentiationProduct Differentiation

Capital RequirementsCapital Requirements

Switching CostsSwitching Costs

Technology, Know-how and Technology, Know-how and InnovationInnovation

Bargaining Power of Suppliers Bargaining Power of Suppliers (Low)(Low)Bargaining Power of Suppliers Bargaining Power of Suppliers (Low)(Low)

Suppliers exert power Suppliers exert power in the industry by:in the industry by:Suppliers exert power Suppliers exert power in the industry by:in the industry by:

** Threatening to raiseThreatening to raise** Threatening to raiseThreatening to raiseprices or to reduce qualityprices or to reduce qualityprices or to reduce qualityprices or to reduce quality

Powerful suppliers Powerful suppliers can squeeze industry can squeeze industry profitability if firms profitability if firms are unable to are unable to recover cost recover cost increasesincreases

Powerful suppliers Powerful suppliers can squeeze industry can squeeze industry profitability if firms profitability if firms are unable to are unable to recover cost recover cost increasesincreases

• Big global supply chain managementBig global supply chain management(Suppliers are not concentrated)(Suppliers are not concentrated)

• Suppliers are forced to cut their Suppliers are forced to cut their prices or go out of businessprices or go out of business

• Direct negotiation with suppliers in Direct negotiation with suppliers in order to encourage:order to encourage:

•Reliable supplyReliable supply•Faster deliveryFaster delivery•Lower pricesLower prices

• Many OEMs start to produce their Many OEMs start to produce their own components in-houseown components in-house

• Big global supply chain managementBig global supply chain management(Suppliers are not concentrated)(Suppliers are not concentrated)

• Suppliers are forced to cut their Suppliers are forced to cut their prices or go out of businessprices or go out of business

• Direct negotiation with suppliers in Direct negotiation with suppliers in order to encourage:order to encourage:

•Reliable supplyReliable supply•Faster deliveryFaster delivery•Lower pricesLower prices

• Many OEMs start to produce their Many OEMs start to produce their own components in-houseown components in-house

Bargaining Power of Buyers Bargaining Power of Buyers (Rather High)(Rather High)

Bargaining Power of Buyers Bargaining Power of Buyers (Rather High)(Rather High)

Buyers compete Buyers compete with the supplying with the supplying

industry by:industry by:

Buyers compete Buyers compete with the supplying with the supplying

industry by:industry by:

* * Bargaining down pricesBargaining down prices* * Bargaining down pricesBargaining down prices

* Forcing higher quality* Forcing higher quality* Forcing higher quality* Forcing higher quality

• Products are fairly undifferentiatedProducts are fairly undifferentiated

• Buyers face few switching costsBuyers face few switching costs

• Online shopping has increased the Online shopping has increased the bargaining power of buyersbargaining power of buyers

• Buyers are price sensitive and demand Buyers are price sensitive and demand high qualityhigh quality

• Products are fairly undifferentiatedProducts are fairly undifferentiated

• Buyers face few switching costsBuyers face few switching costs

• Online shopping has increased the Online shopping has increased the bargaining power of buyersbargaining power of buyers

• Buyers are price sensitive and demand Buyers are price sensitive and demand high qualityhigh quality

Threat of Substitute Products Threat of Substitute Products (Low)(Low)Threat of Substitute Products Threat of Substitute Products (Low)(Low)

Products Products with similar with similar function function limit the limit the prices firms prices firms can chargecan charge

Products Products with similar with similar function function limit the limit the prices firms prices firms can chargecan charge

• There are few substitutes from other There are few substitutes from other industries, if any.industries, if any.

• Most of them seem to be obsolete or Most of them seem to be obsolete or have one foot out of door.have one foot out of door.

For example:For example:

• Digital Camera in the place of Film Digital Camera in the place of Film CameraCamera

• Fax machines in place of overnight Fax machines in place of overnight mail deliverymail delivery

Threat of Substitute Products

Threat of Substitute Products

Threat of New

Entrants

Threat of New Entrants

Threat of New Entrants

Rivalry Among Rivalry Among Competing Firms Competing Firms

in Industryin Industry

Bargaining Power of Buyers

Bargaining Power of Buyers

Bargaining Power of Suppliers

Bargaining Power of Suppliers

Porter’s Five Forces : Model of CompetitionPorter’s Five Forces : Model of CompetitionPorter’s Five Forces : Model of CompetitionPorter’s Five Forces : Model of Competition

Rivalry Among Existing Competitors Rivalry Among Existing Competitors (High)(High)

• Numerous and rather equally balanced competitors

• Short product life-cycle

• High R & D costs

• Lack of differentiation or switching costs

• Imitation of technology

• Counterfeit products

• Low profit margins

• High exit barriers

Threats for Electronics IndustryThreats for Electronics Industry

• Intense competition

• Numerous and diverse competitors

• Short product life-cycle

• Expected slow down in global economy especially in the US and Japan

What Sony is doing to deter the threatWhat Sony is doing to deter the threatWhat Sony is doing to deter the threatWhat Sony is doing to deter the threat

What Sony is doing to deter the threatWhat Sony is doing to deter the threatWhat Sony is doing to deter the threatWhat Sony is doing to deter the threat (Conglomerate Diversification)(Conglomerate Diversification)

What Sony is doing to deter the threatWhat Sony is doing to deter the threat

• Ongoing process/product innovation and Advanced R & D

• Strengthening Profits (through lower materials cost and greater operational efficiency)

• Forming joint-ventures (e.g. Sony-Ericsson)

Q2Q2

Dell Dell Factors influencing the bargaining power of buyer

Buyers are powerful in the markets of servers, storage and networking because of: Small size of market & concentrated buyers Standard products High competition

buyers are also powerful in other computer markets because: Dell's products are not unique Number of competitors are high Switching costs are low

DellDellReducing the bargaining power of buyers

Increasing their loyalty through selling directly to customers Increasing the inherent or

perceived value of its products by

adding innovative features

FedEx FedEx Factors influencing the bargaining power of buyer in

courier industrySignificant pressure from corporate buyers Low switching costs contribute to buyers bargaining powerStrong competitors like UPS , DHL National postal services

FedExFedExHow FedEx managed to reduce the bargaining power of

buyers:FedEx’s ability to leverage new technologies that add

operational efficiencies and impose switching costs upon buyers

The supper tracker system To improve operational efficiency by lowering costs and decreasing

package delivery time.

The FedEx’s introduction of Powership3 Customers who implement this technology into their environment

would face the costs of retraining employees if they decide to change shipping software.

FedExFedExHow FedEx managed to reduce the bargaining power of

buyers:Innovation leader in the courier industry

Its ability to find unfilled opportunities in the market before competitors

Its ability to identify technologies that strengthen the company’s strategic position

Recommendation Recommendation Dell

Concentric diversification of products Wider range of available hardware options Establish service kiosks in shopping malls

FedExExpansion its warehousing and logistics divisions

Positioning strategy Positioning strategy Sony’s electronic segment:

Cutting edge technology company Game: Play station 3

Leading-edge computer entertainment systems

Positioning strategy Positioning strategy Sony-Ericson

Most attractive and innovative global brand C 702 ………………………. Any angle. Any weather C 902 ………………………. Getting the picture W 760i ………………………. Fill it up with songs Z780a ………………………. The web is where you are

Positioning strategy: Positioning strategy: BCG MatrıxBCG Matrıx

HigHighh

LoLoww

HighHigh LowLowMarket ShareMarket Share

Ind

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ale

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stry

sale

s G

row

th

Gro

wth

R

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Rate

VAIO

CRT-TV

Walk man

CD player

Sony-EricsonPC

LCD

Digital CameraDVD player play station Music Player

Q4Q4

Who are the Powerful Customers?Who are the Powerful Customers? Customers (buyer groups) are powerful when

They purchase a LARGE portion of an industry’s total output (Sony’s initial customers at 1946).

The sales of the product being purchased account for significant portion of the seller’s annual revenue.e.g. Some of the automakers’ suppliers

They could switch to another product at little, if any, cost.e.g. Airline industry

Bus Makers’ Industry Bus Makers’ Industry (Specifically city-bus Makers)(Specifically city-bus Makers)

• There are few dominant buyers and many sellers in the industryThe buyers:The buyers:Government, Travel agencies, Organizations.

The sellers:The sellers:Volvo(Sweden), Scania(Sweden), Iveco(Italy), Mercedes-Benz(Germany), Alexander Dennis(UK), Drögmöller Karosserien(Germany), Leyland Bus(UK), Quebec(Canada), Neoplan (Germany), …

• Products are standardizedProducts are standardized

The switching cost is very low

Suppliers do not threaten to integrate forward into the buyer's industry :The buyers’ industry is totally different and unrelated to the suppliers’. In most countries the biggest customer of this industry is Government!

Who is a powerful Supplier?Who is a powerful Supplier?• A supplier group is powerful when :

• It is dominated by a few large companies and is more concentrated than the industry to which it sells.

• Satisfactory substitute products are not available to industry firms.• Industry firms are not a significant customer for the supplier group.• Suppliers’ goods are critical to buyers marketplace success.• The effectiveness of suppliers’ products has created high switching costs for

industry firms.• The threat of forward integration.

CPU Manufacturing IndustryCPU Manufacturing Industry

There are many buyers and few dominant suppliers

The buyers: All the players computer industry.

The dominant suppliers: Intel, AMD

• There are undifferentiated, highly valued products

• They threaten to integrate forward into the industry

• There is not any substitute product!

So

Suppliers’ goods are critical to

buyers marketplace success.

And also

There is a high switching cost for

buyers in this industry.

How Can an Entrepreneur Enter to These Markets?How Can an Entrepreneur Enter to These Markets?

Finance point of view:Accessibility to financial resources, Appropriate NWC

Marketing management point of view:Increase market share through Aggressive Advertising, Promotions, After sale service, etc.

Operation management point of view:Mass production, Lean production

Strategic management point of view:Cost Leadership StrategyBlue Ocean Strategy (e.g. Ford model T, Cirque de Soleil)Strategies which can reduce customers’ & suppliers bargaining power (M&A, Gorilla Attack)

Thank You!