In the past Sony the taking company in the consumer electronics market. It was the first to develop and make selling for new advanced merchandises, with high quality. However over the past 20 old ages the company has faced increasing competition. The company 's strengths are the strong trade name and planetary operation.
It 's failing include hapless deficiency of internal control, deficiency of focal point from excessively many merchandises and increasing gross revenues costs. The are many menaces from competition and increasing monetary value of stuffs and the chances to develop strategic partnership and expand into games and internet music engineerings. To win in the market the company must cut down its costs and go more flexible to the market. It is recommended that Sony implement a strong merchandise development and invention scheme and restructure with entire quality direction and thin fabrication programmes.
Introduction
Sony is company that has been around for many decennaries and its trade name can be seen on many merchandises around the universe. It has non merely been a extremely successful company accomplishing grosss of more than $ 50billion dollars but it has made a major part to the development of electronics ( Luh 2003 ) .Over the past two decennaries all companies have faced the challenge in viing in an increasing turbulent and intensely competitory concern environment ( Kerzner2009 ) . In peculiar, the Internet broadband and digital development has radically changed the universe of consumer-electronics and Sony is faced with strong competition from many countries ( Lu 2003 ) .As a consequence the company has become less competitory and it is apparent that Sony must reexamine and update its concern schemes in order to implement modern direction patterns and remain competitory in the market ( Luh 2003 ) .There is much uncertainness about whether Sony is able to alter and maintain up with the concern environment ( Luh 2003 ) .This study assesses Sony 's yesteryear and current public presentation and schemes and identifies the cardinal issues in its concern environment countries that have lead to the loss of fight. Furthermore, recommendations will be made in order to go and remain competitory in the tough concern environment.
Competition and Strategy Theory
In order to execute reappraisal of Sony so it is of import to understand the theories on competition and scheme. This theory will give counsel on how to see the place of the company.One of the taking theories on competition emphasis that for companies to hold a competitory advantage, they must present a merchandise or service that is much superior than its rivals ( Porter 1996 ) .Furthermore companies must non merely bring forth a alone offer but besides that there is integrating between different parts of the concern Porter ( 1996 ) .In the instance of Sony it has been a leader in its market and in the yesteryear has produced really alone and advanced merchandises. However at the minute it can be seen that the company is non executing as leader in the market.It is besides possible to understand Sony 's place and public presentation by understanding other theory. As stated by Johnson, Scholes and Whittington ( 2008, p.
12 ) strategic direction involves `` understanding the strategic place of an administration, doing strategic picks and pull offing the scheme in action '' . In order to accomplish this, so it is necessary to analyze the concern environment of the company.Several strategic direction tools such as SWOT, Porter 's diamond and Value concatenation analysis can be used in to analyze the Sony 's scheme place and understand how strong it is ( Johnson and Scholes 2003 ) .
Internal Analysis
SWOT Analysis - Strength
One of Sony 's biggest strengths is its trade name name. The name of Sony is known all around the universe and it is has a high repute with consumers and image of quality. A Market study in the U.S put Sony as `` the figure most powerful trade name '' ( Datamonitor 2008, p.5 ) . Furthermore the company has company has strong presence in the market. It is involved in many merchandise countries and has largest portion of the market in audio picture and amusement games. In add-on, it achieved the largest sale of LCD telecastings ( Datamonitor 2008 ) .The company has several countries of operation and therefore has a wide scope of merchandises and services in the countries of: electronics, picture games, images, and fiscal serves.
This variegation allows the the company to `` extenuate its hazard across all sections and caters to a big and diversified client base `` ( Datamonitor 2008, p.6 ) .Another cardinal strength of Sony is that it is a planetary company. This allows the company to present merchandises and services to many markets and entree turning markets ( Datamonitor 2008 ) .
SWOT Analysis- Weaknesses
In several countries of the concern the company costs are increasing, which has resulted in a decrease in net income by 69 % . The chief cost country gross revenues and general disposal ( Datamonitor 2008 ) .In add-on, the company is confronting a figure of legal instances. Harmonizing to Datamonitor ( 2008 ) this is a failing in the company 's internal control systems.
Porter 's Diamond
Figure 1. show analysis utilizing Porter 's diamond.Firm Strategy and Rivalry - Low
But already many big companies in market. Aggresive invention scheme for illustration Apple and Ninetendo. Innovation and viing utilizing Internet and digital engineering.Factor Endowments
Suppliers cut downing monetary values must be competitory.Addition in stuffs monetary values affect supplies monetary values to Sony.Intense competitory market for Sony.
Wide scope of rivals, gloabal and regional.
Demand Conditionss
Buyers strong place. Many picks. Affect Sony 's borders.Competiveness of Support industries
Low switch costs for consumers.Many merchandises can be substitute for Sony merchandises. Eg nomadic phones play music, take images and vie against Sony cameras. Sky HD participant compete against Sony DVD participants.Good quality of replacement merchandises.
Music and picture industry merchandises,Figure 2. Porter 's Diamond Sources Datamonitor ( 2008 ) and Strategic Direction ( 2006 )
Value Chain
Figure 2. show analysis utilizing value concatenation theoretical account.Firm Infrastructure
Global. Many fabrication and R & A ; installationsHRM
Thousands of employees worldwide. Too many employees.Technology Development
Much expertness and high engineering and research development. Lack of new developments or advanced merchandises.Procurement
Increasing costs of stuffsInbound Logisticss
Global distribution channels in 204 statesOperationss
Quality issues. Legal issues from hapless internal control.Increasing admin costs.
Outbound Logisticss
Market & A ; Gross saless
Strong selling partnership with FIFA.Product-focused non client.Increasing gross revenues costsService
Figure 1.Sony - Value Chain Analysis Sources Datamonitor ( 2008 ) and Strategic Direction ( 2006 )
External Analysis
It is possible to set about an external analysis utilizing tools such as the SWOT.SWOT Analysis- Opportunities
The company has found the chance to do many alterations in the how the company operates. First, there is chance to reorganize the direction of the concern, cut downing the size or taking concern units. This besides involved the lessening of the figure of staff around the universe ( Datamonitor 2008 ) .The company can besides concentrate on cut downing the figure of merchandises it produces and bettering the efficiency of its fabrication operations ( Datamonitor 2008 ) .Such chances if successfully followed will assist the company to go more efficient, cut down costs, increase net incomes and give it ability to respond to the market ( Datamonitor 2008 ) .In the selling country the company has the chance to work with Federation International de Football ( FIFA ) allows it to implement many selling and gross revenues publicities for the 2014 World Cup. This chance will let the company to better consumers awareness of the Sony trade name ( Datamonitor 2008 ) .
There are besides chances for Sony to spread out operation in consumer electronics and picture games which is one country which is turning.
SWOT Analysis- Threats
The company faces two chief menaces in its concern: monetary value and competition. The first menace is the addition of natural stuffs that the company depends on for the production including: oil, plastic and metals. All these countries can see monetary values additions ( Datamonitor 2008 ) .A 2nd major menace is the addition in competition. The universe concern environment has become really competitory and there are big companies are viing strongly against in Sony 's markets including: Sharp, Dell Apple, Panasonic, Ninetendo, Toshiba, Samsung ( Datamonitor 2008 ) . Sony face menace of decreased net incomes as companies cut down monetary values to vie.
Strategic Direction
In 1999 implemented a new scheme in order to travel into the digital market.In that clip harmonizing to Sony had ability to link direction ability with merchandise design and utilizing new and advanced engineering.In the 1990s the company made many strategic alterations. Harmonizing to Triendl ( 1999 ) one of the strategic strengths of the company was that it had leaders that had much entreprenurial ability and apprehension of the market. They combine this direction ability with new engineering to make new merchandises for the market and take the lead. Furthermore it besides invested more in the game industry which was turning in the 1990s ( Triendl 1999 ) .
However the company knew it must alter because the concern market was altering and they were non making good in other market countries such as audio and picture. As consequence they made other schemes to do the company more competitory. They reduced the figure of mills by 20 20 % ( Triendl 1999 ) and at the same clip created four concern countries: Home networking, IT, computing machine amusement and nucleus engineering and web ( Beamish 1999 ) . Sony besides restructured the research portion of the company. Many of the research worker were moved to the chief concern units in the company. Additionally, Sony continued to increase disbursement in research development from $ 1.
9 billion to $ 2.6 billion ) and invested in research for the Playstation II ( Triendl 1999 ) . Overall the direction believed that Sony was strong company that produced originative alone merchandises ( Beamish 1999 ) .Following these alterations Sony nevertheless struggled to vie. The Company 's grosss after 2000 became degree and so fell. It has been seeking to bring forth advanced merchandises that the market wants but has non succeeded in presenting new inventions ( Strategic Direction 2006 ) .
In 2005 Sony 's gross fell by 5 % and was the lowest it had been for five old ages ( Strategic Direction 2006 ) . Since the Playstation there have no major inventions for Sony and now it is being described as a company that is a follower ( Strategic Direction 2006 ) .
Recommendations
The analysis shows a figure of countries that Sony could see schemes.First, the client must follow more client concentrated scheme. One survey showed how really hard it was for companies like Sony to accomplish the degrees of quality clients in the big games market wanted.Harmonizing to Ips and Jacobs ( 2003 ) , if companies implement rigorous quality direction systems, it does non `` needfully compare to higher quality in the eyes of the client '' ( p545 ) . They go on to reason that companies must alter the manner that they develop package to concentrate on how quality can be improved to run into clients demands ( Ips and Jacobs 2003 ) . This survey stressed how of import it was to pay attending to clients ' demands. It is suggested that one failing of the company is focused on the merchandise and non on the client ( Strategic Direction 2006 ) .It can be seen that Sony is involved in many markets. Therefore another recommendation is for the company to cut down the figure of merchandises.
It is weak in some markets for illustration it is non able to vie with Dell in computing machines or Kodak in cameras ( Strategic Direction 2006 ) .Another cardinal recommendation is that the company should redesign itself in the same manner as Apple. The company has non done and alternatively it `` reveals a deficiency of assurance and a impetus '' ( Strategic Direction 2006, p15 ) .Furthermore, is that Sony should seek to doing certain its merchandises are compatible with the criterions in the market. Harmonizing to Strategic Direction ( 2006 ) `` 'Interoperability ' is the construct to be grasped '' ( p15 ) by Sony.
In other word it needs to do merchandises that can run with other merchandises.Sony should besides set up more partnerships with companies. As stated by Strategic Direction ( 2006 ) `` their compartmentalisation construction is still against them and something more extremist than coordination would look to be needed '' ( p16 ) . This thought is supported networking and invention theory. Teece ( 2009 ) states that companies `` must encompass possible confederates -customers, providers, complementers - that are active in advanced '' ( p13 ) . Spouses can be a beginning of thoughts for bettering operations or developing merchandises.
It is clear that Sony is non introducing these yearss like other companies in the market such as Apple. In the beginning it was a large pioneer. Sony needs to see schemes for altering the civilization to go more advanced.Finally, in order to go more competitory it is recommended that the company should increase programmes to implement entire quality direction ( Dale 2002 ) and thin fabrication which will assist cut down waste and cost and better the quality jobs they holding in the yesteryear ( Liker and Meir 2004 ) .
Decision
Sony has gone from being a taking company with the best merchandises on the market to a company that is non bring forthing advanced profitable new merchandises such as companies like Apple.The strategic analysis shows that that are several countries that Sony must alter strategically in order become and remain profitable company in the competitory market. Sony must cut down costs, go more flexible and make advanced new merchandises.
