Strategic Analysis of Sony Company - Case Study Example

? Strategy Analysis Presented by 5 Reasons for Sony success Sony Corporation has been on the first lane in creating a successful businessstrategy through utilizing the organizational internal and external analysis frameworks. Sony has used key successful methods to attain in implementing their strategic business analysis plans. Marketing challenges are overcome by developing perfect organizational strategies in order to win the competition (Mohk Jakki, 2010). Knowledge of fundamentals of marketing assists corporations in understanding how to create a perfect marketing strategies using value chain, competitive strategies, and innovation strategies. Sony has used the following 5 successful methods in managing its strategies. 1. Customer satisfaction Planning also entails knowledge of customer’s lifestyle. Lifestyle is important when designing the type of products to sell to consumers in different regions. Sony uses different measures in ensuring all customers receive quality products and services through Voice of Customer (VOC), Customer Satisfaction (CSAT), and Net Promoter Score (NPS) methods. The processes range from communicating to the prospective markets about the services offered and getting the target customer interested, approaching them and presenting on what the business offers, answering questions and handling customer objections, making sales and providing after sale service. Organizations need to understand the importance of measuring customer satisfaction for ever activity in by considering both the internal and external customers. The customer satisfaction strategy has enabled Sony become one of the most electronic competitive company globally by winning a lot of consumers. 2. Analyzing the competitors Sony Corporation faces stiff competition from other major companies in the same industry. The company management has introduced new approaches of analyzing their competitors through implementing various strategies like competitive strategy, and innovation strategy. By learning from their competitors, Sony Corporation has introduced new ideas that aid in market entry and more customer attraction. 3. Creativity The marketing design is highly essential in an organization since it is the fundamental to successful implementation of strategies and achievement of objectives. Multinational business analysis, on the other hand, outlines the potentiality of the business to gain from the market participation. The analysis incorporates strategic levers such as marketing, location and product, and organization analysis such as culture, people, management and structure. Sony becomes creativity by introducing new products in the market that competitors have never thought of introducing. For instance, Sony Corporation introduced the first plasma TV into the market, Bravia that attracted the attention of many customers (Shin, 2003). 4. Keeping detailed records Sony finance and accounting departments ensure that the company maintains all the crucial information regarding every transaction taking place. A successful business must keep all its records in a secure place for future references. Maintenance of company records gives an organization time to create business strategies that assist in overcoming obstacles that hinder the success of an organization (Constanzo & MacKay, 2008). Record keeping occurs through updated financial statements and accounting details. 5. Consistency Sony Corporation ensures consistence in all its operations. All businesses need to know their target targets behavior and buying attitudes and needs while formulating their analysis strategies. Organizational strategy analysis assists in determining what exactly the customers expect to get when they purchase goods or services. It is easier to satisfy and delight customers when their true and perceived needs are known than when they are unknown. In achieving the above, good, competitive, innovation and value chain strategies developed aim at achieving the set goals and missions. A big organization like Sony should implement its plans in a professional manner to avoid other firms in the same line stealing all its customers. All efforts and activities in a business should have unity and focus on giving customers what they demand (Lewis, & Slack, 2003). Analysis of success reasons using internal and external analysis frameworks Competitive strategy In analyzing Sony competitive strategy the Porter’s Five Forces Analysis framework will be used. Sony has been able to win the competitive advantage in the Electronic industry by defeating many highly rated companies. The five Porter forcers under discussion are: barriers to entry, power of buyers, supplier power, substitutes, and internal rivalry (Porter, 1987). 1. Internal rivalry Sony faces intense competition because it operates in several industries with majors on electronics, pictures, financial services, and games (Surhone, Tennoe & Henssonow, 2010). The most common competitors in the market are Apple, Samsung, Microsoft and LG Electronics. Samsung has introduced a great challenge to Sony Corporation in terms of producing superior technological music products like the Home Theatre (Chang, 2008). Sony has faced high internal rivalry among its top competitors, Apple and Microsoft, which has demonstrated high financial returns over the last few years (Yoffie, 2012). On the other hand, the economic crisis contributed to the high rate of internal rivalry because consumers are not willing to spend on high-end non-essential goods. To cope with the problem, Sony has introduced superior products with the latest technology and sold at lower costs (Tang, Misra and Shanholt, 2012; 14-17). 2. Barriers to Entry The market demand amongst sellers contributes a lot to the company’s entry into the market. For Sony Corporation the threat to new entrants is low because the company upholds quality economies of scales, high product differentiation, enough capital requirements, and upholding of government policies. Through the economies of scales, Sony has the capacity of decreasing costs when increasing output a strategy that new entrants cannot achieve unless they work for many years. Secondly, new companies require high capitals to enter into the electronic market because of the high cost of purchasing electronics. Sony Corporation has raised enough capital necessary for entering new market areas without delays and capital challenges. In addition, new entrants into the electronic industry require a lot of technological skills. Sony Corporation has a number of experts with the required technological skills through many years of production and innovation. On the other hand, the government regulation policies and patent protection determines a company’s entry into new environment. Sony share of market has the customer loyalty that makes consumers continue to buy Sony products in presence of other competitors (Frisch, 2004). 3. Substitutes The high-priced product line found in Sony Corporation targets high-end customers. Sony tries differentiating its products by introducing unique designs and producing products with superior technology, but the products face many substitutes. A lot of substitute products are available and the producers of such products offer them at lower costs. Most consumers prefer purchasing substitute products and save on their cash rather than spending twice as much on Sony products. Sony has tried to decrease the rate of substitutes by decreasing its prices and increasing brand loyalties (Tang, Misra and Shanholt, 2012; 17). 4. Power of Supplier The company experiences low supplier power. Sony products are manufactures in different places globally. The global supply chain found in Sony allows it to hire suppliers offering best deals. In addition, the company aims at getting high quality materials from suppliers at competitive prices and who show stable supply. Sony supply chain management focuses on fair business practices through maintaining sound financial and operational practices. On the other hand, Sony has taken the software security violations with a lot of caution and has introduced new methods of coping with security vulnerabilities that affect their software. For example, Sony has collaborated with Samsung in order to reduce input costs for their television segment. Through the collaboration, Sony gains the bargaining power that ensures input prices are kept low and enable the company bargain with suppliers to arrive at best prices (Tang, Misra and Shanholt, 2012; 18). 5. Power of buyer Most buyers in the electronic industry have high powers. According to Heinecke (2011), the current technology allows buyer to make a review of the product online and switch from one brand to the next depending on the tastes and preferences and without incurring high transaction costs. Consumers who make online purchases incur zero transaction cost. To gain more consumer loyalty and allow more people to view and buy their products, Sony has increased on technology and graphics on their website. Products in the electronic industry are hard to differentiate increasing price elasticity and increasing powers of buyers. On the other hand, Sony makes transactions globally and exchange rates have significant effect on the company’s ability to analyze the power of a buyer. The fluctuation of exchange rates affects Sony businesses abroad making the company receive low profits (Tang, Misra and Shanholt, 2012; 19). Innovation Strategy The growth of an organization depends on innovation strategies adopted. The business external environment poses a lot of challenges because many competitors aim at introducing new products into the market that other organizations have not yet introduced (Heinz,, 2001). The type of innovation capable of driving sustainable growth in an organization depends on the strategies adopted. Sony has concentrated on a profitable innovation strategy that assists in creating new business models, improving customer experience, and introducing new investments. The innovation concept can be described as a way of looking at certain assumptions and finding a way in which these challenges could be challenged in order to create a dramatic leap in customer. This means that critical innovations are made so as to create conditions that are of an advantage to the business (Mohk Jakki, 2010). The innovation framework of Procter and Gamble, Connect and Develop, plays a significant role in planning innovation strategies at Sony Corporation (Tang, Misra and Shanholt, 2012). Sony formulates their innovation strategies using the value innovation concept. This is a vital concept in any company and is applicable in order for the organization to attain its goals. Value innovation strategy has enabled Sony Corporation achieve better results. In addition, Value innovation places an equal emphasis on value and innovations that are intended for consumers, the organization as well as customers. The main aim of this particular strategy is towards the creation of growth strategies, new products for the organization, creation of new services and improvements of the existing products that the organization has in the market (Mello, 2006’; Khanna, Palepu and Sinha, 2005). On the other hand, customers would perceive the company as having better products and also offering value for their money. It also explains new and better ways of competing in an existing electronic and pictures markets. Sony value innovation strategy identifies the gaps that are within a market and then takes advantage of the opening by bringing into the market products that attract the attention of consumers. Such factors include newly emerging customer segments (Haig, 2011). To avoid the trap of competition within the market, Sony uses value curves for monitoring the strategy canvas. The value curves assist corporations in discovering innovation windows that help signal when to value-innovate and when not to do so. It alerts the innovator when to start thinking of a better innovation when the value curve begins to converge with those of the competition. It also helps to stop the innovator from pursuing other goals when there are still immense profits that can be obtained from the current innovation. When the value curve still has focus, divergence, and a compelling tagline, the temptation to value innovate again should be avoided. Instead, it should emphasize on improvements in order to achieve maximum business profits and market coverage (White, 2009). Value chain Strategy Sony has set up important strategic concepts that aid in creating a competitive value chain strategy. The company analyzes the future generation of value chain suggestions from the logistic manager. Secondly, there is a need to decide the best approach in structuring the organizations’ value chain strategy (Grayson, 2013). Moreover, Sony value chain managers have first hand information on the strategic sourcing out and making purchase decisions for the customers. Finally, integration of E-Business is very important since it assists in coping with the current growing technology. Production and operations are key functions in services business, which aim at attaining the business goal in a cost-effective way while giving regard to time limits and quality of service. In addition, the management makes concrete decisions related to business opportunities in each and every day. Although a strategy might work today and fail tomorrow due to the frequent change in business environment, strategic planning forms the best weapon for fighting all these inconveniences (Daft, & Marcic, 2008). In the process of expanding the organization’s competitive presence globally, SONY logistics department makes use of technology clock speed. This enables the manager to distinguish and make perfect designs related to company’s fulfillment of technology value chain. The rapid change in technology has made organizations stay on the lookout for better or superior ways of achieving business goals and attaining profits. For instance, the use of internet for business activities has found adoption in the modern business environment. According to Gereffi (2002), outsourcing of non-core business functions is also a concept that has been on the increase among different business firms in the modern business environment. The business environment is global meaning macroeconomic factors from all over the world sometimes have impacts on businesses in different parts. The modern environment has consumers with varying lifestyles and values from time to time. This affects the consumers and target market needs since it affects their tastes and preferences and thus the business managers have to keep up with the changes to meet maintain their customers and attract others (Daft & Marcic, 2008).References Bangs, J. & David, H. (2011). Creating a Plan to Successfully Market Your Business, Products, or Services. The Market plan Guide. Retrieved from: http://www.quickmba.com/marketing/plan/ Bruner, R. F. (2005). Deals from hell: M & A lessons that rise above the ashes. Hoboken, N.J.: Wiley. Chang, S. (2008). Sony vs. Samsung: the inside story of the electronics giants' battle for global supremacy. Singapore: Wiley. Constanzo, L. A., & MacKay, R. B. (2008). Handbook of research on strategy and foresight. Chelteham: Edward Elgar. Daft, R. L. & Marcic, D. (2008). Understanding Management. The seventh Edition. United States of America: Cengage Learning. Frisch, A. (2004). The story of Sony. North Mankato, Minn.: Smart Apple Media. Gereffi, G. (2002). Outsourcing and Changing Patterns of International Competition in the Apparel Commodity Chain. Boulder, Colorado. Grayson, R. (2013). Sony: the company and its founders. Minneapolis, MN: ABDO Pub. Haig, M. (2011). Brand success: how the world's top 100 brands thrive and survive (2nd Ed.). London: Kogan Page. Heinecke, P. (2011). Success factors of regional strategies for multinational corporations appropriate degrees of management autonomy and product adaptation. Berlin: Physica-Verlag. Heinz, W. (2001). Essentials of management. New York: Phill C. Publishing. Khanna, T., Palepu, G. K. and Sinha, J. (2005). Identify Emerging Opportunities. New Delhi: Mckinsey & Company Lewis, M & Slack N. (2003). Operations Management: Critical Perspectives on Business and Management. London: Routledge Mello, S. (2006). Value innovation portfolio management : achieving double-digit growth through customer value. Florida: J. Ross Publishing. Mohk Jakki J, S. S. (2010). Marketing of high-technology products and innovations. New Jersey: Prentice Hall. Porter, M. E. (1987). From Competitive Advantage to Corporate Strategy. Harvard Business Review. 65 pp. 43-59 Shin, S. L. (2003). Business the Sony Way: Secrets of the World’s Most Innovative Electronic Giant. Taiwan: Wiley. Surhone, L. M., Tennoe, M. T., & Henssonow, S. F. (2010). Sony Vegas Movie Studio: video editing software, Sony Vegas, Sony Corporation. Beau Bassin, Mauritius: Beta script Pub. Tang, H., Misra, R. and Shanholt, E. (2012). Sony Corporation. Graffin Consulting Group. Retrieved from: http://economics-files.pomona.edu/jlikens/SeniorSeminars/Likens2012/reports/Sony.pdf White, M. A. (2009). The management of technology and innovation : a strategic approach. Ohio: South Western Cengage Learning. Yoffie, B. David. (2012). Apple Inc. in 2012. Harvard Business School.2-29 Read More