Sony Playstation 2 Case Study Case Study

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Sony Playstation 2

Sony is introducing the Playstation 2 into a general environment that is very good for those that create and work with video game systems. The reason for this is that the market is not yet saturated, and video game sales are on the rise. Sony is also fortunate that their Playstation sold so well, and so those that already own this game system or have been exposed to it can look forward to the Playstation 2. The graphics and other capabilities are significant for many that enjoy gaming, and since the Playstation 2 also plays the older Playstation games as well as CDs and DVDs, the Playstation 2 console is more valuable and more marketable to those that want a multipurpose system. Playstation gamers that purchase a Playstation 2 will not have to give up playing their old Playstation games or switch between systems, and this makes it very convenient. Sony does have some serious competition from Sega and most notably Nintendo, but the Playstation 2 has so many titles available and does so many different things that there should not be a real problem with its introduction and sales of it should not suffer even though it is a relative newcomer when compared to some of the other available systems and brands that are currently for sale.

2. In the industry, consumers have very high expectations of what they want from a video game system and when they expect to receive it. Product delivery cannot always meet that, and sometimes products sell well anyway. Even with limited titles early on, some video game systems have done very well. However, Sony has avoided this problem by ensuring that there will be many titles available when the Playstation 2 is launched. For Sony, the biggest problem with consumer expectations vs. product delivery is the fact that the Playstation 2 has sold so rapidly in Japan and therefore the U.S. market may have the same issues with meeting quotas and having the Playstation 2 available to all that want to purchase it. Many stores in Japan sold out of Playstation 2 consoles in minutes and customer expectations of the quality of the video games for the Playstation 2 were also higher than what the games could actually provide. Sony is working to avoid the low-quality problems for the U.S. market, but the lack of available game consoles will still be an issue.

3. The main competitive forces in play are the availability of the consoles, the availability and variety of video game titles, and the graphics capabilities of the different systems. Also important as a competitive force is what else the console is able to do, such as connect to the Internet to play online games, play DVDs, etc. As for who is the strongest when it comes to competitive forces, no company wins overall. Each company has its different strengths and weaknesses. However, if a judgment had to be made, it would appear that Sony and its Playstation 2 was the strongest. The reason behind this has to do with the fact that many different games of high quality will be available in the U.S. when the system launches, the graphics match or exceed other systems, and the Playstation 2 can play Playstation games, CDs, and DVDs. There will also be technology created for the Playstation 2 to be able to connect to the Internet. All of these different features appear to make Sony the strongest competitor, but its main weakness is that the consoles themselves will likely experience shortages and there will be problems with the demand for them that consumers will place on the market when they first come out. Many consumers will wait until a console is available, but others will purchase a different system, which will lose sales for Sony.

4. In Sony's internal environment, there are many different things that should be considered. First, the core competencies must be addressed. These include the fact that the people that run the company have been doing it for some time and are completely aware of what they need to do to make their system successful. This is very important for the future of the company. Having good people with strong and bold ideas that are also very sound helps Sony to succeed in the video game console market. Sony also has a competitive advantage in that the company is so involved already with music and video, and is such a widely known name. Many young people consider Sony to be a 'cool' brand, and therefore are more likely to purchase products that carry that brand name. Also, being so well established in the music and video industry helps Sony find people to create their games more easily than some of the other companies, and the less restrictive agreements that Sony makes with these individuals keeps them happy with the work that they are doing. Sony provides a lot of value in what they give to the consumer in virtually all of their products, and the Playstation 2 is no exception to this with the different abilities that it has and the moderate and realistic price that is charged for the console itself. The business strategy that Sony uses appears to be geared toward getting good market share and ensuring that the competition is not able to out-do Sony easily. By doing this, Sony increases its market share and keeps both employees and customers very happy with what they can purchase from the company. A SWOT analysis indicates the following: Strengths -- brand name, good quality, many different features, many different game titles; Weaknesses -- lower quality games and 'bugs' when introduced in Japan, no original Internet connectivity, availability problems for the console; Opportunities -- ability to play DVDs and CDs allows for Sony to market more of their other products, large amount of titles available can sway consumers toward buying the Playstation 2 console so that they have more gaming options, chance to show that the problems in Japan will not be repeated in the U.S.; and Threats -- Other video game and console companies have been around longer, other companies have Internet connectivity and online games, the problems in Japan are a black mark on Sony's record and have hurt their stock prices, there is a potential for market saturation.

5. Mr. Kutagari's attitude and the philosophy of business that he holds actually strengthens his effectiveness at the corporate level. This is largely due to the fact that he remains concerned about what is going to happen next and does not simply sit back and enjoy the results of what has gone before. His creative abilities and also important, and he is able to take note of the fact that the problems in Japan must be corrected before the Playstation 2 is released in the U.S. Because he is interested in figuring out ways to correct this, and because he knows that the problems in Japan have injured his company to some extent, he can work to correct that problem so that it will not happen in the future. By doing this he will not only show that Sony is still a strong and competitive company, but also that Sony works to correct problems that they may face instead of ignoring them or leaving them for someone else to clean up. This will get respect not only for him but for his company as well, which is important because Sony is such a large name and involved in so many different ventures. Most people would be elated at how fast and how well the Playstation 2 was selling, and while Mr. Kutagari is undoubtedly happy about that, he also has the presence of mind to be aware of the fact that these rapid sales could actually cause trouble for his company if the demand exceeds the supply so much that customers begin to get upset and decide to buy a different game system instead. Extremely rapid sales or extremely rapid growth are not always the best things for a company, and since Mr. Kutagari knows this and respects it, it helps to make him an extremely effective leader, capable of handling change and making adjustments to his business play and corporate strategy as the need for these things arises.

6. There are many companies and individuals that work to develop video games. These suppliers are much less reluctant to work with those that give them good contract terms, pay them well, and have a strong company that the suppliers feel secure about. Sony is already a strong company, so that is really not an issue for them. They do pay these individuals well, and they also give contract terms that are very fair, although somewhat more restrictive than they were in the early days. Sony largely has all of these main components covered, but that does not mean that there is not anything else that they can do to ensure that they are positioned…

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