Electronics Industry Analysis-Sony

Ali Tehraninasr 1071200112 Reza Sigari Tabrizi 1071200031 Payam Ansari 1071200084 Supervisor: Dr. Anisah Multimedia University , Malaysia Savvy entrepreneurial firm

M ilestones of Sony

Sony today
“ Sony is one of the most important companies in the world of business ”

TV & Audio Equipment
Mobile Phones & Music
Computer
Game Consoles
Movie & Video Equipment
Financial Services
Product Range

Electronics Industry Analysis
Porter’s five forces model
(a framework for analyzing a particular industry)

Porter’s Five Forces Model of Competition Threat of New Entrants Threat of New Entrants

Threat of New Entrants (Low) Government Policy Economies of Scale Product Differentiation Capital Requirements Switching Costs Technology, Know-how and Innovation Barriers to Entry

Bargaining Power of Suppliers (Low)
Big global supply chain management
(Suppliers are not concentrated)
Suppliers are forced to cut their prices or go out of business
Direct negotiation with suppliers in order to encourage:
Reliable supply
Faster delivery
Lower prices
Many OEMs start to produce their own components in-house
Suppliers exert power in the industry by: * Threatening to raise prices or to reduce quality Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Bargaining Power of Buyers (Rather High)
Products are fairly undifferentiated
Buyers face few switching costs
Online shopping has increased the bargaining power of buyers
Buyers are price sensitive and demand high quality
Buyers compete with the supplying industry by: * Bargaining down prices * Forcing higher quality

Threat of Substitute Products (Low)
There are few substitutes from other industries, if any.
Most of them seem to be obsolete or have one foot out of door.
For example:
Digital Camera in the place of Film Camera
Fax machines in place of overnight mail delivery
Products with similar function limit the prices firms can charge

Threat of Substitute Products Threat of New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Porter’s Five Forces : Model of Competition Rivalry Among Competing Firms in Industry

Rivalry Among Existing Competitors (High)
Numerous and rather equally balanced competitors
Short product life-cycle
High R & D costs
Lack of differentiation or switching costs
Imitation of technology
Counterfeit products
Low profit margins
High exit barriers

Threats for Electronics Industry
Intense competition
Numerous and diverse competitors
Short product life-cycle
Expected slow down in global economy especially in the US and Japan

What Sony is doing to deter the threat

(Conglomerate Diversification)

Ongoing process/product innovation and Advanced R & D
Strengthening Profits (through lower materials cost and greater operational efficiency)
Forming joint-ventures (e.g. Sony-Ericsson)

Dell
Factors influencing the bargaining power of buyer
Buyers are powerful in the markets of servers, storage and networking because of:
Small size of market & concentrated buyers
Standard products
High competition
buyers are also powerful in other computer markets because:
Dell's products are not unique
Number of competitors are high
Switching costs are low

Dell
Reducing the bargaining power of buyers
Increasing their loyalty through selling directly to customers
Increasing the inherent or
perceived value of its products by
adding innovative features

FedEx
Factors influencing the bargaining power of buyer in courier industry
Significant pressure from corporate buyers
Low switching costs contribute to buyers bargaining power
Strong competitors like UPS , DHL
National postal services

FedEx
How FedEx managed to reduce the bargaining power of buyers:
FedEx’s ability to leverage new technologies that add operational efficiencies and impose switching costs upon buyers
The supper tracker system
To improve operational efficiency by lowering costs and decreasing package delivery time.
The FedEx’s introduction of Powership3
Customers who implement this technology into their environment would face the costs of retraining employees if they decide to change shipping software.

FedEx
How FedEx managed to reduce the bargaining power of buyers:
Innovation leader in the courier industry
Its ability to find unfilled opportunities in the market before competitors
Its ability to identify technologies that strengthen the company’s strategic position

Recommendation
Dell
Concentric diversification of products
Wider range of available hardware options
Establish service kiosks in shopping malls
FedEx
Expansion its warehousing and logistics divisions

Positioning strategy
Sony’s electronic segment:
Cutting edge technology company
Game: Play station 3
Leading-edge computer entertainment systems

Positioning strategy
Sony-Ericson
Most attractive and innovative global brand
C 702 ………………………. Any angle. Any weather
C 902 ………………………. Getting the picture
W 760i ………………………. Fill it up with songs
Z780a ………………………. The web is where you are

Positioning strategy: BCG Matrıx High Low High Low Market Share Industry sales Growth Rate VAIO CRT-TV Walk man CD player Sony-Ericson PC LCD Digital Camera DVD player play station Music Player

Who are the Powerful Customers?
Customers (buyer groups) are powerful when
They purchase a LARGE portion of an industry’s total output (Sony’s initial customers at 1946).
The sales of the product being purchased account for significant portion of the seller’s annual revenue.
e.g. Some of the automakers’ suppliers
They could switch to another product at little, if any, cost.
e.g. Airline industry

Bus Makers’ Industry (Specifically city-bus Makers)
There are few dominant buyers and many sellers in the industry
The buyers:
Government, Travel agencies, Organizations.
The sellers:
Volvo(Sweden), Scania(Sweden), Iveco(Italy),
Mercedes-Benz(Germany), Alexander Dennis(UK),
Drögmöller Karosserien(Germany),
Leyland Bus(UK), Quebec(Canada),
Neoplan (Germany), …

Products are standardized

The switching cost is very low
Suppliers do not threaten to integrate forward into the buyer's industry :
The buyers’ industry is totally different and unrelated to the suppliers’.
In most countries the biggest customer of this industry is Government!

Who is a powerful Supplier?
A supplier group is powerful when :
It is dominated by a few large companies and is more concentrated than the industry to which it sells.
Satisfactory substitute products are not available to industry firms.
Industry firms are not a significant customer for the supplier group.
Suppliers’ goods are critical to buyers marketplace success.
The effectiveness of suppliers’ products has created high switching costs for industry firms.
The threat of forward integration.

CPU Manufacturing Industry
There are many buyers and few dominant suppliers
The buyers:
All the players computer industry.
The dominant suppliers:
Intel, AMD

There are undifferentiated, highly valued products

They threaten to integrate forward into the industry

There is not any substitute product!

So Suppliers’ goods are critical to buyers marketplace success. And also There is a high switching cost for buyers in this industry.

How Can an Entrepreneur Enter to These Markets?
Finance point of view:
Accessibility to financial resources, Appropriate NWC
Marketing management point of view:
Increase market share through Aggressive Advertising, Promotions, After sale service, etc.
Operation management point of view:
Mass production, Lean production
Strategic management point of view:
Cost Leadership Strategy
Blue Ocean Strategy (e.g. Ford model T, Cirque de Soleil)
Strategies which can reduce customers’ & suppliers bargaining power (M&A, Gorilla Attack)

Thank You!

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Electronics Industry Analysis-Sony

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