Sony Value Chain Analysis

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Strategic Analaysis on Sony

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Strategic Analysis on Sony


Table of Contents

Introduction...................................................................................................................................................1

Strategic Analysis .........................................................................................................................................2

External Analysis......................................................................................................................................2

PEST Analysis.......................................................................................................................................2

PORTERs Five Force Analysis............................................................................................................4

Internal Analysis .......................................................................................................................................5

Value Chain Analysis............................................................................................................................7

Conclusion ..................................................................................................................................................10

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Figure 1: Five Force Analysis of Sony .........................................................................................................4

Figure 2: Value Chain Analysis....................................................................................................................7




Introduction

The significance of strategic planning for organizations in current highly competitive

business environment is evident and systematic and strategic planning is required must for

companies that aspire to become a major player in the respective industry. Strategic analysis is

considered as the objective assessment and understanding the existing market condition of a

company and the costs and capabilities that forms a foundation for the development of strategic

process (Graham, 2008). This analysis helps in applying creativity with numerous opportunities

that can be used to build and enforce a strong strategic plan in a new or existing market.

Strategic analysis begins with a vast description of different strategic goals of an

organization and its enforcement is then assessed in terms of the companys functional and

operational abilities and the consequential competitive and financial performance. For the

accomplishment of organizational vision and missions an effective business strategy is required

to succeed. Featuring from this fact the present research report gives attention on carrying out a

strategic analysis of a firm (McDonald, 1996). In this respect an assessment would be carried out

on Sony and the various strategies adopted by this organization would be analyzed.

Strategic analysis in a business organization is one of the most important tools for

enforcing a proper planning process in the business. A strategic analysis mainly includes the

SWOT analysis, PEST analysis of company etc. These areas define the position of organization

relative to the competition and operational external and internal environment. Strategic analysis

if properly implemented a productive result could be derived by the organization in different

levels of an organization.

Sony is a Japanese multinational conglomerate organization which is having its

headquarter in Konan Minato, Tokyo, Japan. The company is one of the leading manufacturing

units of electronic goods for professional and consumer markets (Henry, 2008). The diversified

business Sony is mainly focused towards games, entertainment, electronic and financial service

sectors. This organization has been ranked at 87 position in electronic goods in the 2012 list of th

Fortune Global 500. Sony has been rated has one of the most comprehensive entertainment firm

in the world. It is the third largest television manufacturing company and is among the

worldwide top 20 semiconductor sales leaders. Numerous strategies has been adopted by Sony

from time to time with an aim to acquire a outstanding position in the international market.




Strategic Analysis

Strategic analysis is the process through which mangers make a set of choice of different

strategies for the organization that will help in to attain better performance. Strategic analysis is

comprised up of a set framework that is utilized for accomplishing out an internal and external

business environment analysis of an organization (Powell, 1995). It is mainly done to develop a

beneficial strategy and assess the factors that could affect in the functioning of a business.

Strategic analysis is used for the entire firm and is conducted from time to time and

mainly puts emphasis on distinguished factors that are external to the business and impacts on

the organization. The framework mainly includes three major assessment i.e. industrial analysis,

business strategy analysis and strategic evaluation.

External Analysis

It is defined as the technique which involves analyzing the market factors that could

impact on the organization. External analysis is designed to provide an idea to the organization in

respect to the intricacy and measures for a specific industry (Boulton, 2010). The main factors

that are being analyzed in it are political, economical, social and technological issues.

PEST Analysis

The major decision of an organization is influenced by many external environmental

factors. In order to present assistance to managers in making an effective decision PEST analysis

is conducted. The analysis for Sony is as follows;




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for people. Products should be designed according to the changing style, tastes and

activities of people etc.

Technological The assessment of technological factor is crucial because Sony works

around the use of technology every day. It entirely depends on technology in order to offer

efficient work productivity at international stage. Sony needs to use enhanced and novel

technology to increase its level of productivity and to be ahead in competition. The organization

will also need to conduct research and development in technological area that would help it

create business for new products.

PORTERs Five Force Analysis

In Order to establish a valuable source to acquire competitive advantage, a complete

analysis of different structure of industry should be done. Porters five force model helps in to

evaluate the external market and distinguished factors are assessed in this respect like bargaining

power of buyer and suppliers, threat of new entrants and substitutes and industrial

competitiveness. The below diagram shows the position of Sony corporation in consumer

electronic goods.

Figure 1: Five Force Analysis of Sony

(Source: (Crossan and et. al. , 2011).




Threat of Market Entrants It defines the factors that act as a barrier for the organization

in new entrants. In this industry threat from market entrants are large economies of scale and

high requirement of capital to enter into this market. None of the competitors could beat Sony in

this respect because of strong brand loyalty and various barriers through patents (Suttle, n.d).

Threats From Substitutes The major threat for Sony in this area are due to short product

life cycle and high cost involved in research and development activities. Other factors could be

lack of differentiation in the product and introduction of all in one device in which every

application could be found (Crossan and et. al., 2011).

Bargaining Power of Buyers It reflects on the advantage that the customers possess, in

this area factors that acts as barrier for firm are high rate of price sensitivity, large number of

customers and low switching costs.

Bargaining Power of Suppliers It focuses on issues that act as hindrance for firm in

terms of suppliers. Sony faces low concentration of suppliers on technological products,

numerous joint ventures and in house production of high valuable components.

Degree of Rivalry It reflects the points that are responsible for rivalry in the industry

itself, in respect to Sony Corporation the degree of rivalry it faces are due to oligopolistic market,

decreasing market sales growth, high innovation required in the industry and price competition

(Sony Corp. Info, 2011).

The battle for market share across vast range of product of Sony is mainly based on

continuous launching of innovative products and changes in price. However, Sony has a major

advantage over its competitors by having the chance to achieve synergy affects across its

business units like music and films.

Internal Analysis

A strategic analysis is required to conduct to identify the strengths and weaknesses of

business by analyzing the various competencies of organization. It includes highlighting the

competitive advantage that an organization possesses and which will help in achieving

profitability for business. In this respect SWOT and Value Chain analysis of Sony would be

conducted as follows;





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Ericson joint venture as it will give opportunity to perform its work actively and innovate

in the tablet and smart phone market. Sony can also enter into the health care imaging sector in a

important way through a possibility to attain 30%share in Olympus (Strategic analysis, 2010).

Threats The organization faces stiff competition from firms like LG and Samsung

which is attaining grip with low cost products such as TV and mobile apps. Apple could also

give Sony a tough competition by bringing its all new version in TV. Sony also faces threats

from online hackers recently the play station of firm was hacked that resulted into leakage of

various customer information.

Value Chain Analysis

The value chain analysis is defined as a set of framework that aids in understanding the

various activities through which a firm could attain competitive advantage over its competitors in

the same market. It also aids in creating value for shareholders and main aim of it is to provide

value to customers. It is divided into primary and supporting activities. The primary activities

include factors like inbound and outbound logistics, operations, marketing, sales and services.

The supporting functions include human resource management, firms structure, technology and

procurement.

Figure 2: Value Chain Analysis

(Source: The value chain, 2010).

Sonys financial position which is a supporting activity in for the management is

considered as the major factor for future success. The credit ratings of Sony outs the organization

in a long term rating and helps to earn a recovery in the electronic segment. Sony has adopted a




multidivisional firm structure and each of its division is divided into smaller specialized units.

The organization focuses to serve its customers with a range of distinguished products; one of

the chief factors for success of this organations is its employees (Fatakia, 2012).

It offers a range of training programs for its workforce and provides them a career

building program. In addition to this the corporation also established a Sony University in

Singapore in 2000 that is especially designed to grow managers globally. In the area of

technology Sony is the beginner of Walkman, Trinitron and Camcorder. The mangers of Sony

focuses on in and outbound logistics efficiently and they chose only those suppliers who obey

the laws, financially strong and are innovative and safeguard the environment.

The organization also introduced a green procurement and implemented various policies

to protect the nature. Other than all these in order to lower down the production costs, Sony is

producing in low income nations like China, Thailand and Indonesia. The firm has programmed

out bound logistics activities i.e. efficiently managed and is distributed in all networks. Hence,

Sony is recognized as one of the best known and valuable company in the world of innovation

and technology development (The value chain, 2010).





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Developing new business and increasing innovation The Company focuses on

promoting creativity and innovation i.e. intended to provide mid to long term

development as well as distinguishing technologies that will improve the core product

value. The firm has plans to enter into different markets and continue to expand its

position in the market.

Associating business portfolio and enhancing resources Sony is increasing its current

process of business selection and aim on investing in core and new business areas. In

terms of investment it involves development of its image sensor manufacturing ability

and insistent investment in strategic development related to new areas (Business Strategy

Analysis, n.d). Other than this organization tries to strengthen its major businesses and

shift towards areas of growth.

However, Sony Corporation has boarded on a sequence of group wide measures to improve

operational efficiency and increase its profit in television business with an aim of returning

towards profit by the end of financial year 2014 (Sony Annual Report, 2012). In order to bring in

transformation in its 20 million unit structure the firm expects to incur addit ional charges of

nearly 50 billion yen. The organization plans to engage itself future fixed cost reduction as its

operations in TV transition from a 40 to 20 million structures. Hence, this firm considers

minimizing variable costs in order to move prior towards growth.

Conclusion

By analyzing the above report it could be said that Sony has been successful in

maintaining a strong position in the market and plans to develop it in future as well. The different

external and internal analysis has shown the current market position of firm and the way through

which it could build competitive advantage in the market place. Strategic analysis aid in attaining

several benefits for an organization as it assists in maintaining a clear idea of organizational

vision and where does it seeks to go (Business Strategy Analysis, n.d). It encourages a

benchmark of the firms current operations strategy against the desired goals and gives priority to

projects and process to most effectively allocate resources.

Sony is a corporate brand whose identity is deeply embraced and very well established in

the minds of its customers. The brand is still healthy in-spite of drooping of some of its market




share (Sony Corp. Info, 2011). The goods and services of Sony are available all around the

world in nearly 200 countries and different territories. The market of US accounts for 17.9% of

the profit, UK 13.9% and others 25%, Japan consists of its largest number of shares. Therefore, it

could be said that the corporation should focus on its core business areas as it is having range of

customers in this sector and the consumer electronic market is anticipated to grow at a rate of

7.2% yearly in order to reach into a value of $136,700 million in 2014. The organization is

exclusively positioned in large global market and maximizes the potential seen in growth

probabilities.




References

Online references

Analysis of business strategy. n.d. [Online]. Available through: . [Accessed on 10 January 2013].

th

Boulton, R. W., 2010. Strategic Analysis Model. [Online] Available at: < http://www.auburn.edu/~boultwr/html/strategic_analysis_model.htm>. January 2013].

[Accessed 10 th

Business Strategy Analysis. n.d. [Online]. Available through:

. [Accessed on th

10 January 2013].

Fatakia, K., 2012. Sony Corporation: Strengths, Weaknesses, Opportunities, Threats. [Online]

Available weaknesses-opportunitie/>. [Accessed 10 January 2013].

at:

Sony Value Chain Analysis

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