Posted: July 13th, 2021
Internal & External Assessment: Sony Corporation
Sony Corporation is an electronics and entertainment conglomerate operating all over the world with its headquarters in Tokyo, Japan. It is classified as a mature company and a ‘cash cow’ due to its profit margins, sales, and annual revenues. It is the world’s leading company in the manufacturing and distributing of electronics. It operates in more than 200 countries globally. Sony Corporation categories its products and services into four main segments. They include the manufacture, production, designing, and selling electronic equipment and devices for consumer and professional purposes such as game hardware, and mobile phones, among others. Secondly, it is involved in the manufacture, production, designing, and selling of music and their licenses (Reuters, 2019). Thirdly, the corporation engages in the entertainment industry through motion pictures, television programming, and digitalized business networks. Finally, the corporation is involved in the communication industry as well due to mobile phones, gaming systems, films, and music, among others.
This shows that the conglomerate operates across industries, hence vulnerable to stiff competition. It works in segments including product and services, entertainment, consumer products, and devices, insurance, financial services, and the communication industries. Some of its main competitors include LG, Samsung, Casio Computers, Dell, and Creative technologies, among others (Reuters, 2019). In the discussion below, the internal and external business environments are analyzed, as well as the corporation’s primary strategy to increase its competitive advantage.
Internal factors and the environment affect the business operations of Sony Corporation. These internal factors manifest from within the firm and usually are its strengths, weaknesses, core competencies, and limitations. These strengths and core competencies enable Sony to achieve its organizational goals and objectives. Some of the main internal strengths of Sony Corporation include a strong brand portfolio, reliability, and profitable products, leadership in technology, and excellent customer relations (Städtler, 208). To begin with, Sony has a robust brand portfolio due to its diverse businesses and product adaptability. As seen above, the corporation operates in many industries and markets, which makes it easy to attract new customers as well as maintaining existing customers. The aspect of managing electronics, gaming products, entertainment, and financial services, shows how diversified the corporation is. This diversification enables product adaptability hence, acquiring one of the most robust brand portfolios in the markets.
Secondly, Sony is a company that benefits from its profitable famous products. The diversity and hitting niches such as the millennials with high tendencies of using gaming products such as the PlayStations, the corporation benefits from the top sale of the products. In other words, Sony can expand its market share by producing a wide range of products that target different niches. Moreover, Sony has a solid reputation in the market as the leading manufacturer, producer, designer, and seller of electronics. Besides, the corporation has the resources that make it the leader in technology, enabling it to exploit many market opportunities (Naga, 2015). Sony is reputable for its ability to handle product multiplicity and reviving failed projects to become profitable projects. This has become possible because the corporation invests in a technologically skilled workforce as well as a healthy organizational culture.
On the other hand, Sony is faced with three main factors that act as barriers to its growth and development. These weaknesses include the vulnerability of its networks and database, poor management, and decreasing product diversification. Over time, Sony has experienced minimal or reduced diversification in its product line as it mainly focuses on one industry rather than all industries. The corporation is focusing on the gaming industry and neglecting other sectors, which makes it a weakness for the corporation. This has retarded its sales and growth rates hence a weak financial sheet (Städtler, 208). Moreover, Sony experiences significant management problems, as there seems to lack a strategic management plan to oversee the diversification of the corporation. Besides, weak management has resulted in poor communication channels across all departments that hassled to decreased productivity.
To evaluate the corporation’s internal performance, an IFE matrix analysis is used, as seen below. The rating includes 4- Excellent, 3- Above Average, 2- Average, and finally, 1- Poor. The results record a performance of 3.15, which is equivalent to above-average performance rating. This indicates that Sony can manage its strategic objectives and capitalize on its strengths to neutralize its weaknesses.
|Strong brand portfolio||0.15||4||0.6|
|Reliability and profitable products||0.15||4||0.6|
|Leadership in technology||0.2||4||0.6|
|Excellent customer relations||0.1||3||0.3|
|Vulnerability of its networks and database||0.1||3||0.3|
|Decreasing product diversification.||0.15||3||0.45|
External factors and the environment affect the business operations of Sony Corporation. These external factors manifest from outside the firm and usually are opportunities or threats to the company. The opportunities, in this case, enable the corporation to achieve its organizational goals and objectives while threats are harmful, as they would impair its growth goal and objectives. When analyzing the external environment of the corporation, it is crucial to analyze the external factors such as Political, Economic, Social, Technological, Legal, and Environment factors (Frue, 2018). Primarily, Sony is affected by political instability in various countries, as it operates in different political environments. Being a global brand, any geographic and political challenges affects the success and growth of Sony. Other than political instability, Sony faces changes in policies and regulations enforced by governments to effect protectionism. Economically, most of Sony’s product are luxury products, not basic consumer needs. Thus, it depends on stable and growing economies; otherwise, its profits are low. In addition, issues such as the efficiency of financial markets and comparative advantage fluctuate depending on the country of operation.
Socially, Sony has an opportunity to exploit where it can serve the entertainment craving among all demographics and population. In the modern world, every individual seeks various forms of entertainment, whether old or young. These forms of entertainment range from music, films, and video games, among others. These products and entertainment cravings cover all demographics of the target market (Frue, 2018). Technologically it has the opportunity to exploit the newest and ever-evolving technologies to maintain its clients. Legally, the corporation is faced with threats from the changing legal regulations ranging from labor laws to tax compliance laws. These laws and regulations are different and unique in each country, making it difficult and a threat to the company’s business operations. Environmentally, Sony has the opportunity to invest in eco-friendly products, which can increase its competitive advantage. The corporation has put in place a Green Management Plan of 2020 that seeks to reduce its carbon footprint (Frue, 2018).
From the above evaluation, it is clear that opportunities are present in social, environmental, and technological factors. They include increased product innovation and creativity, continued IT leadership, increased expansion and diversification to expand its networks and spatial influence, and development of new products. On the other hand, threats are likely experienced in economic, political, and social factors. Some of the most identified threats include high product imitation, stiff competition in the industry, and the likelihood of changing consumer needs. Some of the aspects that render competition potent, in this case, include the pricing strategies and product differentiation. Moreover, the ever-changing and advancing technology forms a source of competition likely to change the trends in the industry. However, Sony is one of the leading corporations in technology, making the aspect more of an opportunity rather than a threat.
To evaluate the corporation’s external performance, an EFE matrix analysis is used, as seen below. The rating includes 4- Excellent, 3- Above Average, 2- Average, and finally, 1- Poor. The results record a performance of 3.5, which is equivalent to above-average performance rating. This indicates that Sony can manage its strategic objectives and can effectively respond to the opportunities and threats present.
|Increased products innovation and creativity||0.25||4||1.0|
|Continued IT leadership||0.15||4||0.6|
|Increased expansion and diversification to expand its networks and spatial influence||0.2||4||0.8|
|Development of new products||0.1||3||0.3|
|Extensive product imitation||0.15||3||0.45|
|Stiff competition in the industry||0.1||2||0.2|
|Changed consumer needs||0.05||3||0.15|
Sony Corporation adopts a generic competitive and growth strategy that involves product differentiation, market penetration, and development. Differentiation in Sony is seen from its unique products and services when compared to other companies and competitors. While making a product unique and different, Sony considers the attractiveness and profitability of the product. An excellent example of the strategy in practice is with the famous PlayStation, whereby it was developed with novelty and uniqueness. These two aspects differentiate the product extensively. Below is a competitive strength assessment chart of Sony and three of its main competitors. This chart enables us to rate Sony on whether its generic strategy is effective or not. The rating includes 4- Excellent, 3- Above Average, 2- Average, and finally 1- Poor
|Product innovation and creativity||0.2||2||0.4||3||0.6||3||0.6|
According to the above analysis, Sonny scores second with an average score that shows that in some aspects, its two main rivalries perform better. Sony’s differentiation strategy can be said to perform better and is effective as it earns the corporation a second position among some of the largest corporations in the industry. Some of the core competencies, as seen above in Sony, include a good and renowned reputation, leading to technological skills, and product innovation. Concisely, the company is competing actively and strongly with its rivalries in the industry.
Frue, K. (2018, November 5). PESTLE Analysis of SONY Corporation: Is brand recognition enough? Retrieved from https://pestleanalysis.com/pestle-analysis-of-sony-corporation/
Naga, A. (2015). Business strategy. In Strategic Management: Analysis and Implementation (pp. 580-588). New Delhi: Vikas Publishing House.
Reuters. (2019). Sony Corp (ADR)SNE. Retrieved from https://www.reuters.com/companies/SNE
Städtler, R. (208). Strategy Coursework – Sony Corporation. Norderstedt: GRIN Verlag.
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