Sony - Sustainable Competitive Advantage, Use of Differentiated Technology, and Diversification - Example

Sony Corporation Name Date Table of Contents 1.0: Introduction 3 2. a: Corporation Identification 4 2: b: Sonny Business Units 4 2: b: 1: Diagram of Sony Business Units 7 3: b: 1: The use of brand name 8 3: b: 2: Use of differentiated technology 9 3 : b: 3: Diversification 9 3 : b: 4: Strategic alliances 10 4: a: Sony Revenue Centers 12 4: b: Business Unit Revenues in billion U.S. dollars in 2017 13 5.0: Conclusion 13 References 15 1.0: Introduction Sony is one of the most successful companies that provide gaming solutions, electronics, health and financial services all under one group. Even it is headquartered in Japan; it has been able to expand to other countries such as in the United States and other European countries. Through this Sony has been able to ensure that it succeeds in the global market where it has been able to succeed while operating various business units. At the same time, it has been able to manufacture its products in different countries, but it has been able to maintain a sense of identity in the global market. Furthermore, the ability of Sony to sustain and create a competitive advantage over the years has been fundamental to the company success and its success in realizing long-term profits in the market. With this in mind, the use of multiple business units has been at a forefront to the Sony success in the past. While most of the business units have been a success, the company has failed in certain operations such as the manufacture of computers in the market especially after it was forced to conduct a global recall of computers once default batteries were dictated in its computers. Even though the company reputation was affected at this point, the company was still able to ensure that it succeeds in the market. Sony Corporation comprises of various business units including the Sony financial holdings, Sony music entertainment, Sony interactive entertainment and the Sony Pictures Entertainment among others. Each business unit person's different roles given that they deal with various products and services. Over the years, Sony has become one of the leading TV manufacturers in the world its main competitors in the market being TCL, LG Electronics, and Samsung Electronics. 2. a: Corporation Identification Sony operates some different business units including the financial services, entertainment, gaming, and electronics business units. However, it is one of the largest companies that deals with the electronics and this are also the central business unit in the company. As a multinational, the company has been able to create a positive brand image in the market and through this has been able to consolidate its position in the market as a leading and one of the most dominant companies in the world across various business sectors. Initially, the company mainly operated as an electronic company before diversifying into other business units, and through this, it has been able to diversify the risks, therefore, improving the profitability of the company. Over the years, the company has been able to invest in the insurance as well as in banking sector, in music publishing and as a record label, engaging in TV and movies along with the primary company operations which are mainly in the electronics field. Though the various operations that the company operates, it has been able to establish itself as one of the leading entertainment companies in the world especially given that it has embraced multiple electronics based elements. The electronics sector deals with various elements including video games, semiconductors, Information technology communication products, and the household electronics items. Therefore, various business units include the Mobile Communications, Financial Services, Home Entertainment and Sound, Pictures, Imaging Products and Solutions, Devices, Game and Network Services and the Music Sector 2: b: Sonny Business Units The parent group Sony Corporation was formed as an electronic company. Through this, the electronics business unit has been able to engage in operations such as marketing, designing, research and development of electronics across the globe. Through this, the company has been able to maintain high and quality production of high-quality products in the market to meet the customers' needs. Furthermore, the electronics business units have also been able to use the modern technology in the electronics field which has significantly contributed to the creation of the positive brand image in the market. Even though most of the electronics manufacturing are based in Japan, the company has also been able to manufacture the electronics in other countries where it has established its subsidiaries such as in the United States, South Korea, Singapore, and in China among other countries. Sony was the first company to venture into the audio market especially with the invention of the Walkman in 1979 a portable music player which revolutionized the sound market and the way people listen to music. Besides, the company has also been able to invest in the computer industry even though its operation in this sector has not been able to achieve much success when compared to other business units. Even though the company initially invested in the computer business, it terminated the venture before venturing into the same market under the umbrella of the VAIO. However, the company has faced significant challenges, and the brand name was severely affected after the company was forced to conduct a global recall on the laptops manufacturer in 2006 after there were cases that some of the laptops caught fire as a result of the explosion caused by the default batteries. Furthermore, since the recall, the computer business took a downhill turn with the sales on the decline which forced the company to offload the business unit earlier in 2014. Sony ability to offer digital cameras has propelled the company in the photography and videography market. The company investments in the companies such as Konica Minolta have made it one of the largest camera manufacturers in the world even though it trails companies such as the Nikon and Canon. The Video sector was mainly operated under the Trinitron brand name even though this later changed after the company created to produce the analog based monitors and the television sets in 2007. Over the years, Sony has introduced various brands which include BRAVIA, and the LCD WEGA which has over the years guided the electronics market. With this in mind, the semiconductor and the related components have also been one of the companies most dominant market segment especially with the investment in the image sensor market. The Sony sensor technology is applied in various components such as the smartphones, tablet computers and the digital cameras (Seitz, 2016). The company has also been able to diversify in the medical related operations. Through this, the company has divulged its operations in biotechnology, healthcare and medical sector in particular with the acquisitions of various companies such as the iCyt Mission Technology, Inc. and the production of the different elements that are crucial in the medical health. Furthermore, with the use of the 3D technology, various technologies are important in the medical sector since they help in identifying various medical problems that individuals might be facing and coming up with ways of eliminating them. Therefore, this mainly helps in providing ICT solutions necessary in the healthcare and reducing major problems that medical practitioners face in the health sector. For instance, the joint venture and the operations of the Sony Olympus Medical Solutions Inc. have been vital in availing the technologies required to succeed in the medical sector. Sony mobile communication business unit initially was operated under the Sony Ericsson brand name but later was changed to Sony Mobile Communications Inc. and deals with the manufacture of mobile phones. However, the company over the years has changed its operations of the mobile phone market especially given that the company solely engages in the production of smartphones under the Xperia brand (Greenwald, 2016). The gaming sector is also classified under the electronics business unit and is operated by the Sony interactive entertainment sector. Over the years the company has focused on the production and the operations of the PlayStation which has gained worldwide acceptance. The Sony Entertainment business unit has over the years been able to achieve a rapid growth especially in the investment in the Sony Pictures Entertainment, Sony music entertainment, and the Sony/ATV Music Publishing. Through this, the company has been able to offer high qualities services to the customers especially given that it can easily integrate various electronics with the entertainment sector. Sony operates mobile payments and other financial services under the Sony Financial Holdings. Sony Financial is one of the most profitable business ventures under the Sony Corporation especially given that it has been able to offer various products which are designed to meet the customer's needs especially those who cannot afford costly financial services. 2: b: 1: Diagram of Sony Business Units 3. a: Source of Sustainable Competitive Advantage Valuable Capabilities Ability to come up with strategic alliances which helps Sony gain a competitive edge in the market over the others in the market. several strategic alliances has enabled Sony to succeed in the market Rare capabilities Use of differentiated capabilities are rare where Sony uses technological skills in electronic market to dominate the market. This include gaming and other electronics that are rare to match. For instance Sony was the fast company to invent Walkman and still uses modern technology to dominate in the electronic market Costly to imitate capabilities Operations of various business Units/ diversification Operating various business units is costly for a company to imitate given that a company must make huge investments and at the same time consistent reseach and development Non substitutable capabilities Sony Brand Image Sony has been able to strengthen its brand which is valuable to the company progress in the long run. Brand image is Non substitutable capability given that other firms cannot be able to replicate it 3: b: 1: The use of brand name Sony has been able to succeed in the market especially with the utilization of the sustainable competitive advantage. Sony brand name is one of the sources of the sustainable competitive advantage in the market. Over the years, Sony has become a reputable company, and through this, it has been able to dominate various sectors across the globe. Hyejung and Jihoon (2016) reckons that for a company to succeed, a positive brand name is important given that this can also be used as a marketing strategy. Selvanayagam and Ragel, (2015) supports this notion and indicates that customers are always seeking to purchase or access various products and services from the company with the positive brand reputation. Sony deals with electronics and other products and services which require expertise given that faulty products can primarily affect its operations. Suomi (2014) is of the opinion that a company must ensure that it can create and protect its brand name if it is to gain and retain a competitive advantage in the market. This is significant especially in the creation and the ability of the company to promote customer loyalty in the global market. Furthermore, customer loyalty plays a major role in the stabilizing of the sales in the market (Chu and Keh, 2006). Even though the computing business operates under a different brand, one of the largest recalls made by Sony in relation to the computers recall negatively affected the company brand name. In fact, Sony computing business segment was unable to recover especially after the recall which affected the company brand name. Therefore, it is important for Sony to consistently protect its brand name if it is to succeed in the market and ensure that it can retain a strong brand name (Wong and Merrilees1, 2007). 3: b: 2: Use of differentiated technology Differentiated technologies are necessary when strengthening the company position in the market. It is important for a company to produce unique and differentiated products in the market to separate its operations from those of its competitors (Cao, Wen, Chen, and Li, 2016). This helps in promoting creativity and innovation which is a source of competitive advantage top any company. Sony produces various electronics and equipment's tailor made to meet the customers' needs. The ability to differentiate its products from the others in the market is crucial especially in a highly competitive market. This enables the customers to primarily identify the products offered in the market (Bravo, Santana, and Rodon, 2016). 3 : b: 3: Diversification Diversification and the use of various business units have been one of the main reason that the company has been able to consolidate huge success in the market. Sonny has multiple business units which primarily contributes to the success and the profitability of the company operations. Olaleye and Aluko, (2007) indicates that diversification helps in the spreading of risks and at the same time strengthening of the brand name which is important for the company future success. Sony mainly operates three main business units which include electronics, entertainment and the finance which are also equally diversified (Adamu, Zubairu, Ibrahim, and Ibrahim, 2011). The growth in sales in one business unit helps in capitalizing on the decrease in sales in other business units. For instance, in 2006, Sony Computer segment faced a major setback after the company was forced to conduct a global recall on its laptops due to faulty batteries (Kocaarslan, Sari, and Soytas, 2017). Even though this affected the company computer sales, the sales in other business sectors continued to improve. This shows the importance of diversification and investment in various business units which Sony has been able to capitalize on (Emele and Umeh, 2013). 3 : b: 4: Strategic alliances Strategic alliances help in pooling the resources together by different companies to hunt for a given strategy (Yang, Lai, Wang, auniar, and Xie, 2015). This is usually for the provision of services or manufacture of certain products that are likely to ensure that it is highly profitable in the long run. Strategic partnerships are fundamental to a company success and in consolidating a competitive advantage in the market (Kumar, 2014). Even though Sony has been able to achieve diversification in the market, it has also been able to create the various strategic partnership which has consolidated its position in the market. According to Kim, (2015) the strategic partnership helps a business in consolidating a large pool of resources for mutual benefits. This can either be through joint ventures and another part of partnerships which are vital for a company to succeed in the market. Over the years, Sony has been able to engage in a number of strategic partnerships such as Viettel Telecom formed a partnership to help in the production and the management of the smart card systems in the Vietnamese market. This is crucial since it can also be used s strategy to venture and conduct marketing campaigns in Vietnam (Cao, Chordia, and Lin, 2016). On the other hand, Sony in the past has been able to establish partnerships with Google in relation to the marketing distribution and manufacture of various products in the market. Partnerships are crucial especially in cases where the companies involved has been able to consolidate positive brand reputation given that this gives them an edge in the market (Lin, and Darnall, 2015). The strategic alliance between Sony and Google has been at the forefront of establishing a dominant force in the market. The association seeks to use the Android platform to help in delivering cloud-based products which are beneficial to both companies as it helps them in gaining a competitive advantage in the long run (Li, Jiang, Pei, and Jiang, 2017). However, the strategic alliances have been at the forefront of the Sony success in the market. Strategic partnerships are critical since they help a business in coming up with new products that focus on the individual companies strengths which give them a competitive edge in the market. One of the remarkable strategic alliance over the years has been the partnership between Sony and Samsung in the production and the manufacture of the LCD (Liquid Crystal Display). Furthermore, there has been other alliances such as the coordination with the Hon Hai Group in regards to the LCD TVs production (Luo, 2008). This has been the same platform that has been shared with the Discovery Communication and IMAX in the entertainment sector, and this has contributed to the surge in growth of the entertainment industry. Other notable and significant development that has facilitated the use of strategic alliances has been its partnership with the companies such as Ericsson, and Sharp among others and has been instrumental in the company success (Xu, Liu, and Zhang, 2012). 4: a: Sony Revenue Centers Sony revenues are spread across various business units. The main business units that have highly contributed to the success of Sony over the years in terms of revenue has been mobile communications, financial services, home entertainment and sound, pictures, imaging products and solutions, devices, game and network services and the music sector (Krell, D. 2016). In the last five years, there has been movement in terms of revenues and the three most dominant sectors has been mobile communications, home entertainment, and sound as well as the game and network services. In 2016, the most dominant sectors in terms of revenues have been the game and network services which amounted to 13.7 billion dollars and increase from 11.57 billion dollars which were realized in 2015. However, the success of the gaming and network sectors has been as a result of the increase and the adoption of the PlayStation in its line of the products. Even though there were significant in various business sectors such as in gaming and network services, there has been decreasing especially in the sales of the mobile communications which has significantly reduced in the last two years. In 2014, the mobile communications made the most revenues given that it made revenues 15.83 billion dollars while in 2015 the total revenues were 11.3 billion dollars and in 2016 the total revenues were 9.98 billion dollars which shows a significant decrease in terms of sales. However, there was slight growth in terms of revenues especially in the financial services sector which an increase in 0.47 billion dollars. 4: b: Business Unit Revenues in billion U.S. dollars in 2017 Business Unit Revenue Mobile Communication 6.78 Financial Services 9.71 Home Entertainment and Sound 9.28 Pictures 8.06 Imaging Products and Solutions 5.18 Game and Network Services 14.73 Music 5.78 Semi-Conductors 6.9 Components 1.74 5.0: Conclusion Sony has been able to achieve tremendous success in the global market since it was established. Initially, the company was created as an electronic company, but later the company has been able to acquire and invest in other sectors to increase its dominance in the market. Being one of the global leaders in the home appliances, Sony has been able to record high sales, and at the same time, the company has been able to achieve high revenues even though they have fluctuated over the years. The primary challenge that Sony has faced has been increasing in competition in various sectors which has affected its sales and its dominance in the market. The ability of Sony to diversify and operate various business units has enabled the company to take advantage of various strategic advantages which are important for a business to succeed. In most cases, companies often fail to due to their inability to diversify and incorporate various business operations in their operations. Besides, another strategic advantage that Sony has had is the ability of the company to establish strategic alliances even with the competitors, and this has helped in propelling the company to tremendous success in the global market. It has partnered with the competitors such as Samsung and other companies such as Google, and this has been helpful to the company operations in the long run. With this in mind, the uses of modern technology have also helped Sony to keep check of its competitors and through this ensure that it comprehensively dominate the market which is great significance to the company operations. Even though Sony has succeeded in the diversification and operating various business units, the stability of revenues has been affected especially with the constant stagnation of income in the market. Even though the sectors such as gaming and domestic appliances has been able to maintain high revenues still there is a need to ensure that stability is maintained in the market. Therefore, Sony should focus more on improving its sales in the market and through this make sure that it succeeds and it can maintain fruitful and profitable operations in the long run. References Adamu, N., Zubairu, I.K., Ibrahim, Y.M. and Ibrahim, A.M., 2011. Evaluating the impact of product diversification on financial performance of selected Nigerian construction firms. 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