Competitive strategies and market structures in microeconomics

Microeconomics: Differentiating Between Market Structures in an Organization

Microeconomics

Electronics Industry

The electronics industry has become one of the largest and fastest growing industries which generate billions of dollars every year. The major products of this industry include personal computers, laptops, mobile phones, televisions, digital cameras, music players, telephones, speakers, recording media, and all types of accessories for these products. The operations, performance, and profitability of the participants of electronics industry is affected by a large number of market forces like technological advancements, competitive pressures, consumer behavior, governmental policies, and economic situations of the target countries.

Sony Electronics Corporation

Sony is one of the top market leaders in the electronics industry of the world. It manufactures, promotes, and sells a large variety of electronics and technological products at very competitive prices. The Sony products are recognized all over the world for their quality, reliability, and a real value for the customers' money. The success of Sony can be attributed to its focus on innovation and quality management which enables it to produce world class products after extensive research and development. The world's electronics market in which Sony operates is dominated by a few large competitors that compete with a large number of small and medium scale local and international brands. These large competitors create an oligopolistic competition in the industry. However, the presence of a huge level of competition has transformed the market structure of this industry from oligopoly to monopolistic competition where manufacturers offer the same product line with differentiation and variations. The biggest market force which has helped in this transformation process is the rapid advancements in the field of Information Technology and Computer Sciences.

The monopolistic market structure has been created because there are a large number of manufacturers that produce heterogeneous products with slight variations with respect to their features, functions, quality, and raw material. These variations enable the manufactures to charge different prices for their products as compared to their competitors (Hall & Lieberman, 2010). Converse to the monopolistic competition at a larger scale in the electronics industry, there is a perfect competition and oligopoly for a few product categories. These alternative market structures are not adopted because the competitive pressures have made it impossible for the firms to compete just on the basis of prices while keeping the products identical. Therefore, companies have to regularly introduce new products to the market which are different from any other similar products available in the market. Monopolistic competition also allows no barriers to entry or exit for new and existing firms respectively. There is an open competition in the world's electronics and IT market which largely facilitates the new entrants by offering attractive growth opportunities and potential market segments. On the other hand, oligopolistic competition is avoided in this industry due to tight barriers to entry and low growth for small and medium scale competitors.

Strategies to use in the Long run

1. Differentiation Strategy:

In order to operate in the presence of a strong competition in the most competitive and profitable fashion, Sony should use differentiation strategy for all its electronics and technological products. The competition from the local and international electronics brands has thrown numerous identical and heterogeneous products in the market which has significantly increased the choice of customers among different brands. The differentiation strategy will enable it to manufacture, promote, and present its products in a unique way (Ferrell & Hartline, 2011). It will distinguish its products from all the available alternative choices. For example, improvements in the product design (exterior look, features, etc.) and process design (performance, quality, software compatibility, performance, etc.) will bring new products to the markets which will be unique in their design, faster in speed, and better in performance than previous models.

2. Product Attribute Strategy:

Product attribution refers to the ability of manufacturers to produce their products exactly according to the customer requirements (Paley, 2006). That is, every new product must be manufactured by keeping in view the changing customer trends, purchasing power, life styles and preferences, and other parameters of purchase decision. Product attribution can become a competitive strategy in the long run if Sony applies it to all its products and service offerings. This strategy will help it to attract a larger number of customers by offering the products that best match their requirements. Innovation is also a major player in product attribution strategy (Lancaster & Withey, 2007). Through its innovative products developed through extensive R&D, Sony can persuade the customers to buy their required products in new design and with extra functionality and features.

3. Supply Chain Relationships:

Supply chain members play an important role in making a brand successful in the market. Sony has to compete with both local and international brands in every target market that also offer same products with different quality and prices. The profitability and market share in this strong monopolistic competition can only be increased if a firm gives focus on each and every stage of its operations; from purchase of raw material to the delivery of products to their final consumers. Therefore, it is vital for Sony to build strong relationships with its raw material suppliers, private retailers, distributors, promotional agencies, and other members of the supply chain. These strong relationships will help it to maintain the same manufacturing capabilities and customer services in the long run (Ferrell & Hartline, 2011).

Recommendations

As a part of differentiation strategy, Sony will have to give more emphasis on Research and Development and Total Quality Management principles. It should invest a greater amount on R&D in order to find out new ways of manufacturing unique and innovative products for all types of customers. The investments made in the area of Total Quality Management will help it to maintain the operational excellence and quality of its products and customer services. Differentiation strategy will also increase its competitiveness and improve its brand image as a top quality brand in the world markets.