Sony Strategic Analysis, Executive Summary

Sony Corporation is a Japanese multinational conglomerate consisting of a number of business units (consumer electronics, gaming, movie production, music and financial services) making it one of the most comprehensive entertainment companies in the world.

However, the start of the 21st Century has been a difficult period for Sony resulting in a decline in operating profits and share prices.

A SWOT and PEST analysis indicates that economic and social circumstances are favourable for Sonys products and during this time Sonys traditional strengths such as its diversity, global presence and spirit of innovation have ensured that the company remains a key force but there also exists a number of weaknesses such as its culture of super-excellence, resistance to (internal) change, missed opportunities such as the MP3 player market & new gaming demographics and an over-reliance on the success of too few new products. Fortunately threats such as a HD-DVD/Blue-Ray standardisation war and competitor competition in the next round of the cyclic console war have been partially handled through alliances with other companies to attempt to maximise the potential demand for Sony products in these important sectors. However it is critical for Sony to recognise its weaknesses, taking appropriate action and continue to not only consider its current competitors but it must also keep an awareness of new emerging Asian competitors that we have termed Chony.

With reference to Porters Four Alternatives it can be seen that the core elements of Sonys business units lie in the area of Differentiation (Games/Films/Music) or Differentiation/Focused Differentiation (Consumer electronics dependent on actual product) placing it in a strong position.

Additionally, an Uncertainty/Impact analysis shows that the baseline threats of Chony, the DVD-format war, music internet downloads and console competition are understood and anticipated whilst the discriminate areas of partnership success, impact of e-downloads, next generation technology/innovation (competitor light bulb moments) and new gamer demographics still need further consideration.

By 2007 Sony improvements in operating profits and share prices are being realised as the company aims to understand and satisfy their customers needs whilst also maximising partnerships rather than simply focusing on cost cutting measures.

We believe that Sonys future is bright and that it must remain a global force in the entertainment business and diversification of its core business units must not be undertaken. We suggest that Sonys objective should be:

To make tomorrows entertainment dreams an affordable reality today and its strategy to achieve this to be:

By the realisation of prospective markets and greater divisional cooperation.

To help achieve this objective and strategy the following should also be considered:

Exploring the EMS market (e.g. Flextronics)
Increased divisional synergies
Improved management/designer/production/marketing cooperation and communication
Alliances/cooperation with competitors to establish standards
Move some operations to lower cost areas in Asia Explore the potential of the newly exposed gaming markets
Explore the potential of the movie/music/book e-downloads markets
Explore the potential of the high-end business/office electronic markets