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...

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…