Sony Corporation - Case Study Example

However, in 1942 he modified his theory stating that innovation can no longer be the realm of individual entrepreneurs due to the gradually building capitalism; rather shall be the forte of innovation professionals & laboratories controlled by management of large companies [Dejardin, Marcus. 2000]. This theory applies to Sony considerably given that the organization spends heavily in R&D across all the product lines. As per statement released in 2003 by Nobuyuki Idei, Chairman & CEO of Sony Corporation, the organization planned to spend 500 billion Yens (about 5.

1 billion US Dollars as per current rate) in three years to develop competitive key electronic devices through internal innovations although the organization invested 502 billion Yens (about 5.12 billion US Dollars) in 2005 itself. [Sony Corporation, 2003; Sony Corporation, 2005] Sony has been practicing creative destruction by forcing the old available products towards obsolescence by virtue of their innovations. One excellent example is the "style" innovation of Sony latest Pocket Style VAIO P that is expected to yet again create a new niche segment for Sony that may force laptops to obsolescence especially in applications like Internet usage, word processing, multi-media & entertainment, messaging, Internet based telephony, etc.

[Prokaza, Julian. 2009] Sony practices the strategy of Differentiation Strategy thus targeting niche markets where products are unique and sold at premium rates. They tend to develop unique market segments where there aren't any competitions and the pricing strategies are totally in their own control. Walkman, Play Station, and now the Pocket Style Vaio P are examples of product uniqueness that Sony brings to the market. In these markets Sony is not bogged down by competition that practice Cost Leadership strategy.

Sony's strategies against Porter's Five Competitive ForcesFollowing is the model of Porter's Five Competitive Forces [Harvard Business Review, 2008; Cliff, Bowman. 2008; Ankli, Robert E. 1992]: Sony practices product uniqueness (differentiation) and achieves the same by virtue of huge investments in Innovation and R&D. This strategy ensures that Sony is well placed when mapped against the Porter's five competitive forces model as presented below:Threat of new entrants and substitute products & services: Sony's strategy of continuously developing unique products and market segments keeps them shielded from new entrants in the market given that the level of R&D required to develop such products is huge and not easy for competition to introduce substitute products.

Rivalry among existing competitors: Sony hardly has any rivalry with competitors because their products are already priced at premium rates even in the market segments that are not unique to them. In