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Strategic Analaysis on Sony

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Strategic Analysis on Sony

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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

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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.

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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).
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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
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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
process of business selection and aim on investing

Sony is increasing its current

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 additional 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
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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.

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