Sony Company Analysis

Sony
External Analysis
Dynamics of the Industry Using the 5-Forces Model
Sony is a company with wide-ranging businesses in video gaming, film making, electronics and financial services. The dynamics of the industry include the following five forces: 1) competition, 2) bargaining power of buyers and customers, 3) bargaining power of suppliers, 4) threat of substitution, and 5) threat of new entrants. The first two forces are the strongest in the industry in which Sony is part of. Competition is fierce in the gaming and filmmaking industries as well as in the electronics and financing industries. The bargaining power of consumers is also strong. With so many competitors in the industry offering a variety of quality products to choose from, and with customers determining which companies will get what market share, Sony’s top focus is on offering competitive products, such as the Xperia phones to the PlayStation at competitive prices, while offering top-notch franchise entertainment, such as Spider-Man and the company’s collaboration with Disney’s Marvel Studios (Sakoui & Pickert, 2017).
PESTEL
Political factors impacting Sony are minimal; the biggest political factor now impacting the tech sector is the preservation of data and data security needs. Sony itself was a victim of widespread hacking in 2015 that led to a major internal scandal among top executives whose private correspondence was leaked to the public (Fritz, 2015). In the wake of Facebook’s Cambridge Analytica scandal and Zuckerberg’s testimony before Congress, it is expected that governments will be requiring tech firms to provide better data security for their users.
Economic factors impacting Sony include a tightening credit cycle which means that servicing debt will be harder for companies with high debt-to-income ratios (Kim, 2018). Fortunately, Sony has been servicing its debt in recent years and is on the lower end of the spectrum of companies at risk (Culpan, 2016).
Social factors impacting Sony all show opportunities for growth as the gaming industry continues to thrive, as does demand for entertainment of the Marvel variety (of which Sony’s Spider-Man is a key component).
Technology factors show that mobile tech is still a highly competitive industry and that digital tech will continue to flourish in the now firmly established Digital Age. Research and development will be the key to securing market share and Sony’s PlayStation 4 has met and exceeded expectations in this regard (Culpan, 2016).
Environmental factors are an issue, as e-waste concerns are a big topic for stakeholders of a generation that is insisting on more sustainability and corporate social responsibility. With e-waste piling up around the world, Sony faces accountability questions going forward on how it will manage the reduction of e-waste (Bhutta, Omar & Yang, 2011). Sony has implemented a Green Management 2020 plan to have a zero environmental footprint within two years’ time (Sony CSR, 2018) in order to protect the global environment and maintain its place in the global market place.
Legal factors facing Sony include securing patents for new products, managing e-waste and securing data protection so as to prevent future hackings.
Most Urgent and Important Opportunities/Threats
The most urgent opportunities for Sony are to increase data protection, decrease its environmental footprint on the path to sustainability and continue to invest in new research and development so as to stay at the forefront of the gaming industry. The most urgent and important threats to consider are competitors in the industry like Microsoft with XBox, Samsung with Galaxy phones, and the tightening credit cycle currently being triggered by the Federal Reserve increasing rates. Sony must manage each of these fronts carefully in the coming years.
Internal Analysis
Strengths/Weaknesses
Sony’s PlayStation 4 has been a huge success for the company as has its successful rebooting of the Spider-Man franchise and its deal with Marvel to include its proprietary character within the Marvel cinematic universe. Sony’s profits rose in 2017 nearly 350% as a result of strong PlayStation sales (Kharpal, 2017). However, Sony’s main weaknesses can be found in the electronics division, where Samsung’s Galaxy and Apple’s iPhone continue to lead the pack of mobile phone providers (Pressman, 2017).
Special Resources, Capabilities, and Competencies
Sony’s special competencies include its video game and console development division as well as its proprietary rights to Spider-Man.
How Sony Creates Customer Value Over and Above Its Costs of Production
Sony creates customer value over and above its cost of production through innovation in video gaming, electronics such as Sony digital hand-held cameras, TVs an financial services, which help consumers to make purchases via installments on a payment plan (Sony Corporate Strategy, 2013).
Business Level Strategy
Sony’s business level strategy is based on differentiation—the idea that a company must differentiate itself from competitors “or die” (Trout & Rivkin, 2006). This has been especially the case with Sony’s PlayStation 4 which is unlike both the Xbox and the Nintendo Wii (its closest competitors) and offers a unique gaming experience for players that is wholly different from anything else on the market.
How Sony Achieves Competitive Advantage
Sony achieves competitive advantage through its generic business strategy based on differentiation as well as innovation and proprietary film rights. Sony’s PlayStation 4 and Spider-Man franchise set the company apart from all others in the industry as these two products are unique and in demand.
Strategic Groups in the Industry
Strategic groups in the industry include Microsoft, Samsung, Disney, and Apple as the main electronics, gaming and entertainment companies that directly compete with Sony. Each uses a similar generic business strategy to set itself apart from the others. Sony follows a strategy based on the industry life cycle and worked to have the PlayStation 4 debuting on the market at the same time as Microsoft was debuting the new XBox One. Likewise, Sony’s ability to reboot the Spider-Man franchise has coincided with the industry’s demand for fresh Marvel creations.
Guided by Technology
Sony’s strategy is guided by technology as the industry itself is heavily influenced by new tech developments. Sony is at the forefront of this development in the gaming industry.
Corporate Strategy
Mergers & Acquisitions
Sony does engage in a number of mergers and acquisitions: recent examples include the acquisitions of Altair Semiconductor, Ministry of Sound, and Ten Sports. The firm is already very diverse in its approach to business but the recent purchase of stakes in PlanetTV and Funimation have increased Sony’s foothold in entertainment media as well. Its key acquisition in 1989 however was Columbia Pictures which allowed the firm to begin producing entertainment films using its own equipment. That allowed the company to be vertically integrated. Sony is horizontally integrated through its various other acquisitions like Vevo which allows the company to produce and stream content to users directly.
Ethical and Environmental Issues
Sony’s main ethical and environmental issues relate to data protection and e-waste control. With its Green Management 2020 policy already in effect, it aims to address the issue of sustainability and with the recent hacking scandal behind it, Sony is investing in data security.
Strategic Recommendations
Sony should continue to reinvest in research and development in the gaming industry in order to differentiate itself still further from Microsoft and it should also continue to pay down its debts as the credit cycle begins to tighten. It must also continue to leverage its proprietary film rights for Spider-Man as the Marvel universe expands and furthers its box office dominance year in and year out. By focusing on the products that most directly impact the company’s bottom line—the PlayStation and the Spider-Man franchise, Sony will excel in the marketplace and maintain its position at the front line of gaming and entertainment services.

References
Bhutta, M., Omar, A. & Yang, X. (2011). Electronic Waste: A Growing Concern in
Today’s Environment. Economics Research International, 2011, 1-8.
Culpan, T. (2016). Moody’s says ‘game on’ to Sony. Retrieved from
https://www.bloomberg.com/gadfly/articles/2016-12-14/sony-debt-upgrade-shows-hirai-s-playing-to-his-strengths
Fritz, B. (2015). Amy Pascal Steps Down as Head of Sony’s Film Business.
Retrieved from http://www.wsj.com/articles/amy-pascal-steps-down-as-head-of-sony-pictures-film-business-1423157351
Kharpal, A. (2017). Sony profits rise. Retrieved from
https://www.cnbc.com/2017/10/31/sony-earnings-q2-2017.html
Kim, N. (2018). S&P warns high corporate debt could trigger next default cycle.
Retrieved from https://www.bloomberg.com/news/articles/2018-02-05/s-p-warns-high-corporate-debt-could-trigger-next-default-cycle
Pressman, A. (2017). Apple’s next iPhone is already facing a stronger field. Retrieved
from http://fortune.com/2017/09/05/apple-iphone-8-samsung-lg-sony/
Sakoui, A. & Pickert, R. (2017). Spider-Man comes to Sony’s rescue. Retreived from
https://www.bloomberg.com/news/articles/2017-07-07/spider-man-comes-to-sony-s-rescue-looks-to-shake-sequel-fatigue
Sony CSR. (2018). Green management 2020. Retrieved from
https://www.sony.net/SonyInfo/csr/SonyEnvironment/ourvision/GM2020/
Sony Corporate Strategy. (2013). Sony corporate strategy. Retrieved from
https://www.sony.net/SonyInfo/News/Press/201305/13-065E/index.html
Trout, J. & Rivkin, S. (2006). Differentiate or die. In The marketing Gurus (ed.
Murray). NY: Penguin.