Table of Content
Brief Overview of the Company.
Porter’s Five Forces analysis.
Organizations Future Strategies to move forward.
The aim of the report is to provide a strategical analysis of Sony Corporation, in which PESTLE analysis and Porter’s 5 force analysis will be carried out. This report will provide the background of the company along with the future strategies that the corporation should accommodate in its operations. It will also provide recommendations to the CEO and company director for the long-term direction of the business.
The Company was founded by Akio Morita and Masaru Ibuka in 1946 and is headquartered in Tokyo, Japan. The company’s operations include networked products and services; music; consumer products and devices; pictures; financial services and others. It also operates its subsidiaries across 200 countries in Europe, North America as well as Asia. Sony is the global leader in electronics industry with operation in over 140 countries (Alhashash, Alshammari and Al-Mnaies 2019). The firm is involved in designing, improving, manufacturing and sales of electronic equipment and instruments, marketing of software’s and game consoles to final markets. The Company has more than 114,400 employees who are working with team spirit to face any challenge in the competitive market and to increase loyal customer base in global market. Sony’s brand image has great influence on the global customers, which always help this company to diversify product line and expand its business in new marketplace. The net income of the company in 2019 was ¥ 916.2 billion with total assets of ¥23.039 trillion in 2020 (Hong 2018).
Political Factors: Sony is an international company and its businesses in a particular country are affected by government policies. Such policies mainly determine how the government controls business in the particular country. For instance, Sony is doing well in countries such as Syria due to the poor government policies, which put unfavorable restrictions to international companies (Oliinyk, Kozmenko, Wiebe and Kozmenko 2018).
Economic Factors: The economic factor of a country influence the business of Sony Corporation in most of the countries includes economic growth, exchange rates, and variable tax policies. The company has done very well in countries such as Japan and the USA where exchange and interest rates are favorable (Hong 2018).
Social Factors: Sony is also affected by the changes in social trends that occur in the countries where it operates. Such changes greatly influence the demand of Sony’s products; for instance, the company does well in the United Kingdom since the lifestyles of citizens in this country are greatly influenced by fashion and stylish preferences.
Technological Factors: Sony depends on technological advances to innovate its products; the company has been able to manufacture most of its products as a result of the technological know-how and innovative ability of its engineers. For instance, Sony was the first company to produce a portable music player owing to the advanced technology of its experts (Oliinyk, Kozmenko, Wiebe and Kozmenko 2018).
Environmental Factors: Weather and climatic conditions are also other factors that affect the operations of Sony in most countries. They affect activities such as tourism, insurance, and farming, which in turn affect the demand for Sony's products. For instance, Sony cameras have a high demand during winter in Syria as a result of the high number of tourists that visit the country (Chen, Zhai, Li and Vucetic 2018).
Legal Factors: The Company operates in number of countries around the globe where it is greatly influenced by laws of various countries. Every country have set of rule under which the business has to operation and adhere to it. For example, Sony has to adhere to the new law of age discrimination in UK (Richeri 2016).
Threat of New Entrants: Threat of New Entrants is very low because of large investment are required to enter telecommunication industry and other industry in which Sony Corporation works and it is difficult for new company at their initial stage to invest such a large amount. However, well-established multinational companies enter this prospective market by using several entry route strategies, such as they apply Joint Venture strategy to share competitive advantage and resources of other company (Foss and Saebi 2018).
Bargaining Power of Customers: This power is relatively high in telecommunication sector as the customers are highly concern about the price of the products along with the quality of the telecommunication service; therefore, most of the Telecommunication service providers offer quality service at low price. As a result, the switching off costs become too low to purchase the products of another company while the purchasing power of the customers are too high, therefore, the concept of customer loyalty is totally absent in the telecommunication industry (Richeri 2016).
Bargaining Power of Suppliers: According to the report of telecommunication service providers, the bargaining power of the suppliers is moderately high. However, technological support providers, machinery suppliers, and other raw material suppliers are the key suppliers in the telecommunication industry; therefore, Sony needs to maintain good relationship with the suppliers by imputing flexible provisions in the agreement and clearing dues on time (Chen, Zhai, Li and Vucetic 2018).
Threat of Substitutes: At present, the bargaining power of substitute products is too high in telecommunication industry, for instance, the customer can contact using e-mail service and can talk using Yahoo messengers, Google messengers, skype and so on. As a result, the importance of telephone for communication has reduced slowly, but this company can experience lose if the customers become more familiar with the services of substitute products (Foss and Saebi 2018).
Competitive Rivalry: The competition among existing companies is extremely high as market leader of Telecommunication industry are losing market share due to high competitive market and new entrants. The major industry competitors include Dell, Creative technologies, LG, Samsung, Fujifilm Holdings, Philips, Pioneer Corporations, Hitachi, and Casio Computers (Chen, Zhai, Li and Vucetic 2018).
Product development: Product development implies the investigation of existing markets for introducing a new product. The current market has lots of new products that are way better than Sony products. It is important to innovate the existing product to gain a competitive advantage and for the growth of the company (Hong and Wang 2017). To generate a new idea, the company needs to consider the factors which include market trends, competitive environment, and corporate strategies.
Improving customer satisfaction and approaching techniques: This refers to the way an organization or institution would treat the consumer. High-performance institutions normally tend to have good and effective strategies for obtaining, treating, and retaining their customers in all terms. These organizations also apply all the necessary processes and facilities, to support and withhold the approach of their consumers (Oliinyk, Kozmenko, Wiebe and Kozmenko 2018). To do this it is important to understand the consumer’s expectations by observed the current market trends and trying to meet them accordingly, in a manner that ensures that both external and internal customers are fully satisfied.
Improving quality: The Company needs to focus on the concepts that involve the practice of constantly improving performance in business, simply by targeting the end-users, while at the same time, trying to address the expectations of the stakeholders (Foss and Saebi 2018). In other words, this approach would ensure that both the company and the customers benefit equally in the long-term. To implement this concept, it is important to include end users. Customers are of great importance to businesses, and nothing should be allowed to come between organizations and their consumers. The idea of gaining and retaining customers involves a lot of benefits, as well as costs (Hong and Wang 2017).
Internal and external stockholders plays a very important role within the business. The stakeholder of the company are able to ensure the successful outcomes from the various projects of the company. Stakeholders are largely affected by any decision made by the organization. There are two types of stakeholders primary and secondary. Primary are those who are directly affected and secondary are those who are indirectly affected by the actions of the organization (Foss and Saebi 2018).
Sony Corporation must reconsider how the company interpreted vertical integration. The purpose of vertical integration is to create a more cost-efficient operation. Moreover, the strategy should be implemented to significantly increase Sony’s market share. Even a small business firm understands that it is not prudent to integrate everything into the company’s supply chain. It is best to focus on their strengths and establish business partnerships to help them deal with their weaknesses. Sony should rediscover its roots and remember that the company rose to prominence because of its innovation and not from the acquisition with other companies.
The operations of Sony are affected by environmental, social, political, and legal factors. Sony has been able to nurture its ability to gain a competitive advantage in the market. Some of the significant factors greatly responsible for achieving such milestone include robust and sustainable technology, price leadership, and innovation. It can be concluded that the report has carried out an internal and external strategical analysis of Sony Corporation in which it was found that the organization primarily deals in the manufacture of electronic appliances and is position two globally among the electronics manufacturing companies.
Alhashash, F., Alshammari, T. and Al-Mnaies, A. 2019. Sony Corporation. Journal of the community development in Asia, 2(2).
Chen, H., Zhai, C., Li, Y. and Vucetic, B. 2018. Cooperative strategies for wireless-powered communications: An overview. IEEE Wireless Communications, 25(4), pp.112-119.
Foss, N.J. and Saebi, T. 2018. Business models and business model innovation: Between wicked and paradigmatic problems. Long Range Planning, 51(1), pp.9-21.
Hong, S. 2018. Financial Situation Assessment of the Sony Corporation. Available at: http://dspace5.vsb.cz/bitstream/handle/10084/127484/HON0091_EKF_B6202_6202R010_2018.pdf?sequence=1&isAllowed=y
Hong, Y.U. and Wang, J.Y.,2017. Analysis and Suggestion on the Development of SONY. DEStech Transactions on Economics, Business and Management, (icem). Available at: http://www.dpi-proceedings.com/index.php/dtem/article/view/13136
Oliinyk, V., Kozmenko, O., Wiebe, I. and Kozmenko, S. 2018. Optimal control over the process of innovative product diffusion: the case of Sony corporation. Economics & Sociology, 11(3), pp.265-285.
Richeri, G. 2016. Global film market, regional problems. Global Media and China, 1(4), pp.312-330.
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