Threats of New Entrants – Low
Threats of New Entrants – Low
Threat of new entrants for Sony companies are rather low till today. It is because Sony was protected under some features such as economies of scale, product differentiation, capital requirements, technology and innovation and government policy. Companies that wish to enter in the industry might need to invest more in order to build up their brand and reputation because Sony already has a strong image in consumer’s mindset, (Porter, 2008). Besides that, Sony is an innovative organization and they can decrease cost by increase their output or production. As for the new entry, they have to put in more effort and money in the planning and R&D in the early stage.
Bargaining Power of Suppliers – Low
As known, Sony is a global brand that is recognized by everyone. Big organization would have their own supply chain management or system in order to control the inbound as well as outbound operations. Therefore, Sony will not only concentrate or rely on few suppliers that may disadvantage them. For example, Sony has huge demand in supply thus they can always negotiate for lower price for the raw material. Suppliers have no choice to lower their costs in order to get customer else they will have no place in the business market. Besides lower prices, Sony deals with suppliers based on delivery lead time and reliable supply. Overall, Sony does not allow suppliers to take control of them, (Roy, 2011).
Bargaining Power of Buyers – High
Although the bargaining power of suppliers is low in Sony Company, that of buyers is slightly higher. Products price is not a secret anymore in today’s market. Consumers can easily get the product information and do comparison through online shopping or forum. Sony focused on premium price range products and they tried to differentiate their products with their competitors such as LG and Samsung, in terms of technology. But buyers will look at the price first and not the technology because products in this industry are fairy undifferentiated. To them, switching cost to another brand is low and they can get similar products in lower price. Nowadays, buyers are more prices sensitive and demand in product’s quality, (Porter, 2008).
Threats of Substitute – High
Sony aim premium price line products as their target market. They focused on the technology, innovation, uniqueness as well as the quality of the product. But in today market, there are a lot of competitors who launch similar products but with lower price. For example, we can say Sony laptop versus Acer laptop. The difference between both laptops may be up to 20 percent. As for the consumer, they might compromise due to the price of product or cost savings. They may switch to another substitute with similar product line, (Roy, 2011).
Internal Rivalry – High
Sony takes part in numerous sectors within the industry. For instance in the segments of games, music, entertainment, electronics, and networking and finance services. Direct competitors for Sony are Samsung, LG, Apple and Panasonic, (Porter, 2008).
Sony Samsung LG Apple
Industry Position
Company Size Headcount of 162,700. Main office located at Tokyo, Japan. Headcount of 344,000 as for year 2011. Main office located at Korea. Headcount of 80,000. Main office located Korea and more than 115 operations around the world.
Products
Competing Market
Strategy
Reference
Porter, E. M. (2008). The Five Competitive Forces that Shape Strategy: Harvard Business Review,
Roy, D. (2011). Strategic Foresight and Porter’s Five Forces: Towards a Synthesis: GRIN Verlag
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