INTRODUCTION

Sony Corporation is the electronics business unit and the parent company of the Sony
Group, which is engaged in business through its four operating segments Electronics
(including video games, network services and medical business), Motion pictures, Music and
Financial Services. Its diversified business is primarily focused on the electronics (TV,
Gaming Consoles, Refrigerators), game, entertainment and financial services sectors. The
company is one of the leading manufacturers of electronic products for the consumer and
professional markets. These make Sony one of the most comprehensive electronics companies
in the world. The company's slogan is Sony. Like no other.
INTERNAL ANALYSIS
A. Organizational Resources (Organization Design/Structure)
With continuing growth and success, Sony adopted the strategic business unit(SBU) form
of the multidivisional structureto implement its related linked diversification strategy, Sonys
corporate-level strategy the SBU form consists of 3levels comprises the corporate
headquarters, strategic business units and SBU divisions.
B. Technological Resources
Some of these Sonys technological creations have created new markets of their own.
Sony also patents its revolutionary innovations that include the trademark Walkman and
video tape beta video format.
C. Human Resources Management
Sonys official website often stresses that the development and vitality of Sony's
employees drives dynamic growth for Sony. So far, Sony is able to provide comprehensive
training programmes worldwide to train its employees to equip them with superior knowledge
and skills.
D. Innovation Resources (Product Development)
Innovation is one of the two central pillars of the Sony establishment. This pillar was
put in place by the company's founders, who, through their complementary skills and
enthusiastic leadership, set the foundations of a true culture of innovation at Sony. The ability
to continuously innovate and come up with revolutionary innovations that boost sales and

helps widen profit margins showsthat Sony possesses substantial quality innovation resources
(including scientificcapabilities) that are hard to imitate and valuable.
EXTERNAL ANALYSIS
PESTL Analysis - Macro Environment
A. Political
Government policies are important drives for the success of almost every countryin the
world. In the late 1990s, there was increase privatisation and deregulation of the consumerelectronics as well as media and technology industries globally. However, as of mid-1990s,
governments intervention and regulation remained substantial. For instance, being a Japanese
company, Sony was not allowed to set up broadcast networks in the United States due to the
policies established by the government. In some countries such as Russia,China, Brazil and
Ukraine, the government also failed to take effective interventions to address the piracy
matter and thus caused movie and music companies to lose billions of dollars a year.
B. Economics (Global-Geographic)
The era of globalisation in the 1990s has the interconnectedness of the various markets,
thus leading to emergence of worldwide production markets. It estimated that the demand for
innovative electronics and network centric products will double by 2010. Although rapid
growth and increased trade and businesses may intensify competition (entrance of other
competitors) and even lead to non-standard competitors enter into the industry to complete,
it can present opportunities for consumer-electronics companies like Sony toenlarge their
markets.
C. Socio-cultural & DemographicSocio-cultural.
A survey by Goldman Sachs revealed that 60% of Americans played video games and
61% of these game-buffs were adults; 43% were women andtheir average age was 28,
implying that this form of entertainment was now mainstream. Similar trends were observed
in Europe and Japan too. In fact, it was stated that price and quality of the products were the
two most important considerations that influenced consumers decisions and of course this
included without having to compromise on quality and service. In addition, increasingly over
the years, the more adventurous Y-Generation is also looking to make their possession of
innovative product increase further. This presents an opportunity for all media and technology

companies to increase their revenues by offering innovative products and services at

reasonable prices.
D. Technological
New services such as Internet Telephone and the increase in the use of
telecommunications services (such as online shopping) provide Sony with the opportunity to
leverage on new technologies to increase their sales. In addition, e-commence and internetbased activities (such as online banking and insurance purchases)are other areas where Sony
can derived ancillary revenues from. Better still, in someinstances, technology advancements
also means having opportunities to reduce operation costs such as savings on commissions for
sales agents when sales are done online.
E. Legal
Intellectual property and intellectual property rights creation as well as commercialization
and protection have given Sony a significant source of comparative advantage of enterprises.
SONY ELECTRONICS CORPORATION: SWOT ANALYSIS
1. Strengths
Sony has built a brand. This is highlighted by the fact that the company was tagged
in a 2011 survey as Asia's most valued brand.
Besides creating the Trinitron Color television, VCR, and Walkman, the company
helped develop the magnetic recording tape, the compact disc, and the Blu-Ray
disc, used today as a medium for high-definition video playback. Its latest
innovation, a Crystal LED television, was well received at the Consumer
Electronics Show in Las Vegas.
Out of all its products at present, Sony's success with the Playstation is most
noteworthy -- it has been successful since inception, and still sees tremendous
consumer demand.
2. Weaknesses
The high cost of media production, especially in its television business, has
affected the company's pricing strategy. Its television business has lost an
equivalent of $6.3 billion for eight years in a row. It's also losing market share to
manufacturers, such as LG and Samsung.
While diversifying into too many business segments, the consumer electronics
giant has shifted its focus from its core competency. This has resulted in a

distortion in Sony's brand. Apple, which is also in the consumer electronics space,
has managed to focus on just a few products, build competency, and make them
incredibly successful.
3. Opportunities
The company can take advantage of its movie and music business along with its
experience in the gaming space to deliver value-added content to support and
integrate its product line.
The company has the opportunity to enter the healthcare-imaging sector in a
significant way through a possible acquisition of a 30% stake in Olympus.
4. Threats
Sony faces price competition from competitors such as Samsung and LG, who are
gaining traction with lower-cost products such as televisions and mobile devices.
If rumors are to be believed, Apple can give a tough time to Sony by introducing
its own version of the television, Apple TV.
Sony's online network faces threats from hackers. The company's Playstation
network was hacked, resulting in leakage of customer information, such as creditcard data.
Analysis of Competitive Forces - Porters Five Forces Analysis
1) Threat of Substitute Products (LOW)
The possibility threat of substitutes is moderately low; since there are few substitutes
from other industries (if any); and most of them are seemed to be obsolete or have on foot out
of the door, e.g. digit camera in the place of film camera and fax machines in place of
overnight mail delivery. Consider that Sony has built a good reputation and strong customer
loyalty, it effectively position the companys products against product substitute to some
extent; this is a surplus for the company.
2) Bargaining Power of Buyers (HIGH)
The power of buyer is high due to almost no switching cost for customers to switch
from one brand to another. The access to the internet also allows customers to have all the
information on prices charged by the different companies. The possession of this information
may cause price sensitive buyers to switch to buying from companiesthat offer cheaper prices.
On-line shopping has also increased the bargaining power of buyers.
3) Bargaining Power of Suppliers (LOW)

The suppliers do not have an upper hand (low bargaining power) due to large number
of suppliers and customers. Moreover, Sony operates in big global supply chain management
and its suppliers are not concentrated. Comparatively, they are also much small in size and
thus normally have weak bargaining power. Sony usually engages indirect negotiation with its
suppliers in order to secure reliable supply at lower prices.
4) Threat of New Entrants (LOW)
Threat of new entrants is low as the entry into the industry requires high
capital,economies of scale, product differentiation as well as technology and innovation
know-how. Moreover, the industry is regulated that every potential entrant is required to
obtain approval from the relevant authority of the particular country before the company is
allowed to be operated. Every new entrant that infringed into the big players territories can
expect strong retaliation from them. Therefore, it also serves as a deterring effect to potential
entrant.
5) Intensity of Rivalry (HIGH)
Industry rivalry is high due to relatively intense competition and high exit cost. The
high intensity of rivalry is also largely due to the numerous and equally balanced competitors
in the markets, generally short product life cycle as well as high R&D, fixed and storage
costs. The industry growth is slow and thus further heightens the intensity of competition.
CONCLUSION
From the analysis above, it can be deduced that competition in the consumer
electronics industry is intense and therefore will not be attractiveness (i.e. profitability) to
potential entrants. However, the overall industry attractiveness does not imply that every
company will return the same profitability. If Sony is able to apply its core competencies,
business model or network well, the company can still achieve a profit above the industry
average. A clear example of this is the airline industry. As an industry, profitability is low and
yet individual companies, by applying unique business models, have been able to make a
return in excess of the industry average.

BUSINESS STRATEGY
STRATEGY ANALYSIS OF SONY CORPORATION

Arranged By :

Nizar Satya Diawan

(105030200121011)

BRAWIJAYA UNIVERSITY
DEPARTEMENT OF ADMINISTRATIVE SCIENCE
BUSINESS ADMINISTRATIVE SCIENCE
MALANG
2014

REFERENCES
http://en.wikipedia.org/wiki/Sony
http://www.scribd.com/doc/43406139/Strategic-Analysis-on-Sony

http://www.fool.com/investing/general/2012/03/02/sony-corporation-strengths-weaknessesopportunitie.aspx