Sony Corporation commonly referred to as Sony, is a Japanese multinational conglomerate.Its diversified business is primarily focused on the electronics (TV, Gaming Consoles, Refrigerators), game, entertainment and financial services sectors.The company is one of the leading manufacturers of electronic products for the consumer and professional markets.Sony is ranked 87th on the 2012 list of Fortune Global 500.
Porter five forces analysis is a framework to analyze level of competition within an industry and business strategy development. The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation.It helps to take a fair advantage of a situation of strength, a situation of weakness, and avoid taking wrong steps.
1.Threats of
new Entry (Low): Electronic industry needs huge amount of capitals. High scale economy
and constant innovation is another barrier to a new entrant. Moreover, the government
policy acts as entry barrier for a new company. Furthermore, The mobile phone
industry of SONY is already a well-established
market and the threat of a new entrant is quite low, as the technology needed
to rival the devices already available is quite advance if they want to differentiate
from them The barriers to entry in the mobile phone industry.
2.Bargaining
Power of Buyer (High): In order to achieve in the majority of markets, a
company should meet the expectations of their customers which come from age,
income, educational level, or even personality. Buyers seem to be more prices
sensitive if the products are not differentiated because they can alternative
to another retailer. For SONY Corp. product the bargaining power of buyer is
very high as there is almost no switching cost from one brand to another. And
the information technology provides the customers with wide range of alternatives.
The strategic competitors of SONY are LG, Samsung & Panasonic. Brief
information about the competitor of Sony Electronics Corporation LG Electronics
(Korea) is a multinational electronics company.
3.Bargaining
Power of Supplier (Low): SONY has a
global band of suppliers giving the suppliers no upper hand (bargaining power)
over SONY. Moreover suppliers are comparatively small entity than SONY so
suppliers have weak bargaining power. SONY usually negotiates directly with its
supplier to obtain high quality product in low price.
4.Threat of
Substitute Products (Low): The products can be substituted by the same need of
consumers (Campbell et al, 2002). Campbell (2002) insisted that the threat of
substitute might have 2 factors which are the price and performance of the
substitute and willingness of buyers to switch to the substitute. First the
price and performance of the substitute, Secondly the willingness of buyers to
switch to the substitute. SONY’s varied range of products has no substitute
or a very few that seems to be obsolete or have on foot out of the door.
Thus the possibility threat of substitutes is moderately low. Considering that SONY
has built a good reputation and strong customer loyalty, it effectively
positions the company’s products against product substitute to some extent;
this is a surplus for the company.
5.Intensity
of Rivalry (High): Businesses usually compete with each other in many ways for
example, pricing, promotion, advertising and additional services. Moreover,
Campbell (2002) insists that the fifth force is the most important in five
forces model and 3 factors of the fifth force have been explained.
First ‘the
height of entry barriers and the number and size of the competitors in the industry’.
Second ‘the
degree of brand loyalty of customers’.
Third ‘the
power of buyers and availability of substitutes’.
Industry
rivalry is high due to relatively intense competition and high exit cost. It is
also largely due to the numerous and equally balanced competitors in the
markets, generally short product life cycle as well as high R&D, fixed and storage
costs. The growth is slow and thus the intensity of competition.
References
http://en.wikipedia.org/wiki/Porter_five_forces_analysis
http://en.wikipedia.org/wiki/Sony
http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five-forces.aspx?TestCookiesEnabled=redirect
http://www.ukessays.com/essays/marketing/the-bargaining-power-of-supplier-and-generic-strategy-marketing-essay..php
http://www.scribd.com/doc/180710526/Sony-Corporation
