Sony Summary, Conclusions and Recommendations

Sony

Summary, Conclusions and Recommendations

Key Success Factors

Confronting the realities of the economic downturn and its own poor financial performance, Sony is working to reduce costs throughout the Sony Group by more than 300 billion yen in the fiscal year ending March 31, 2010, compared to the fiscal year ended March 31, 2009. (Form 20F, Year Ended Mar. 31, 2009).

Sony is reforming its electronics business operational for greater agility and profitability. The company has already adjusted production, lowered inventory levels and reduced operational expenses and plans to curtail or delay portions of its investment plans, downsize or withdraw from unprofitable or non-core businesses, realign Japanese and overseas manufacturing sites, reallocate its workforce, and reduce headcount. (Form 20F, Year Ended Mar. 31, 2009).

Sony has integrated its electronics and game businesses, as of April 1, 2009 with the aim of delivering networked products and services that can communicate seamlessly with a common user interface. Sony seeks competitively priced products that are delivered in a timely manner. (Form 20F, Year Ended Mar. 31, 2009).

5.2. Distinctive Competencies

5.2.1. Although an analysis by BusinessWeek showed Sony's brand lost 12% of its value last year due to losses in televisions and game consoles, the brand is still considered to be the 29th best global brand which is valued at nearly 12 billion dollars (Kiley and Helm, 2009).

5.2.2. Sony Corporation (Sony) is the world's second-largest consumer electronics maker. Its diversified operations are spread across electronics, games, entertainment, and financial services categories. (Sony Corporation - SWOT Analysis)

5.2.3. In order to be a leading company in the digital age, Sony aims to leverage its unique advantage of producing both hardware and content. It also seeks to ensure that 90% of its electronics product categories are network-enabled and wireless-capable by the fiscal year ending March 31, 2011. (Sony Group Corporate Strategy Update FY2008 - FY2010)

5.2.5. Despite its financial difficulties, the company continues to make substantial investments in research and development and is planning a 1.8 trillion yen investment over the next three years. Approximately 900 billion yen will be allocated to components and semiconductors, such as image sensors, batteries, display devices and Blu-ray Disc-related components. (Sony Group Corporate Strategy Update FY2008 - FY2010)

5.3. Recommendations and Conclusions

5.3.1. In addition to the Market Opportunities and Threats identified in section 1, the following should also be considered:

5.3.1.1. Strengths

-- Strong brand equity (Kiley and Helm, 2009)

-- Commitment to research and development (Sony Group Corporate Strategy Update FY2008 - FY2010)

-- Diversification

-- Hardware and content synergies

-- Market leadership in consumer electronics (Sony Corporation - SWOT Analysis)

5.3.1.2. Weaknesses

-- Difficult to change culture which impedes synergies and innovation (Game on, 2009)

-- Unprofitable across most product lines, with a loss of nearly $3 billion in 2008 (Game on, 2009)

-- Manufacturing in high-cost Japan (Game on, 2009)

-- Declining brand equity (Kiley and Helm, 2009)

5.3.1.3. Opportunities

-- Cheaper labor markets

-- Innovation in components and semiconductors

-- Consumer electronics leadership offers room for new product introduction as well as the ability to bundle content with the heardware

5.3.1.5. Threats

-- Lower-cost competitors

-- Continued recession with negative implications for consumer electronics in particular

-- Yen's further appreciation

-- Accelerated price wars

5.3.2. Sony needs to take steps to make sure that there are no further declines in its coveted brand. It needs to divest of unprofitable products that do not add to the company's overall brand standing in the market place. This issue must also be addressed through better marketing of the brand as innovative and exciting.