Sony Case Study

1. Reasons for suffering wearout

1) The internal culture and core rigidities of Sony

 In their own success, Sony created a problem for themselves - resisting changing, and failing to recognize that changes were happening rapidly.

All core competencies have the potential to become core rigidities (死板). Core rigidities inhibit Sony's ability to access and develop new capabilities, and it prevents Sony from responding appropriately to changes, in particular the rapid changes in technology, thus losing their competitiveness.

 The culture for Sony appears to be product focused rather than market focused. The Co. is resistant to change and has been too comfortable with past success, resulting in complacency(自满). Sony has benefited from large margins on its consumer electronic products; however, these are increasingly being threatened.

Strategic myopia and inflexibility on the part of the firm's manager strangle (扼住) the firm's ability to grow and adapt to competitive threats through innovation.

For example, customers' buying motives have changed and Sony did not respond that Sony has no equivalent of Apple IPod, and the company failed to capitalize on the demand for flat screen televisions

2) Competition

 Sony is losing market share with the rest of competitors (Samsung, Matsushita and LG) are maintaining and growth the market share.

 However, Sony must know where the real threat is coming from - Samsung, Apple and Microsoft. Sony has not equivalent of the Apple iPod, which is having a major impact on the personal stereo market. Samsung is ready for the presentation of its new 3D TV, however, Sony is lagging behind its competitors in launching new products and technologies.

3) Positioning

 Sony used to be a powerful force in consumer electronics. However, business diversification into movies, music and financial services finds it difficult to move with the times.

The purpose of diversifying into other business is to complement the current core business. Sony may lose sight of its core business and their unique competitive advantage when extending over many other industries.

 Doubtful positioning:

Sony is claiming benefit that customers will doubt that the brand can actually deliver, such as the Sony Ericsson phone and moving into LCD televisions.

 In addition, Sony is seen as difficult to develop technologically superior products.

2. Strategy Recommendations

Generally speaking, Sony need to realize value migration that focuses on the task of discerning what customer needs are and then developing a new product or adapting an ole product that will meet those needs.

This approach makes it possible to anticipate changes in the needs and wants of customers and be prepared to meet those needs as they arise. In the process, the company is able to shift or migrate to a new way of doing business. This way, it is possible to stay ahead of competitors, and sometimes seizing first mover advantage and creating a presence before other begin to notice a newly developing business opportunities.

1) Business level strategy

Porter's Generic Strategies are being used to illustrate what is Sony's competitive stance and its positioning in consumer's mind.

 Differentiation Strategy

Though issues exist in Sony, the company still has several core competencies in the value chain which they could utilize to further gain competitive advantage over its competitors.

 One core competency is their supply chain management, which links to their ability to maintain a steady stream of high quality materials coming in for production because of their long-term good standing with their material suppliers.

The highly coordinated logistics system handled by outsourced firms also form part of their core competencies, leading to excellent inventory management and always on schedule production activities.

 Another core competency is their ability at operation - the moving assembly line. They are able to get ahead of the competitors manufacturing process.

 Moreover, Sony's has competitive technological advantage over emerging IT firms that are moving into the consumer electronic arena.

Though Sony is lagging behind its competitors in launching new products, the company has already realized it and focused on expanding its PC, Blu-ray Disc-related products, media stations into core businesses.

 Instead of being a follower, Sony should focus on first mover advantage

 In addition, Sony may also offer a portfolio of products that complement each other (LCD TVs and gaming platform), thereby enriching the differentiation for the customer and perhaps satisfying a portfolio of consumer needs.

 At last, to maintain success with differentiation strategy results, Sony must have specially trained units to provide responsive after-sale service to ensure high customer satisfaction.

In conclusion, the differentiation strategy would enable efficient use of existing technology, and would be recognized by target audience. Instead of fighting against competitors directly or producing products with similar features, Sony need to concentrates on investing in and developing features that differentiate a product in ways that create value for customers.

 Positioning Strategy

To enhance the potential results of differentiation strategy, a product class positioning strategy could be used by Sony to create competitive advantage based on a single design/composition difference.

For example, to avoid doubtful positioning and make people believe Sony's cell phone, Instead of simply positioning the products as electronic devices using product attributes positioning strategy, Sony could change itself and advertise on selling "Sony lifestyle".

The company could gain more consumer exposure by offering cell phone that works with or has relation to another products, such as Sony music studio.

Some people are more apt to try a revolutionary product, thus Sony could use product class positioning strategy to introduce new products that differ from traditional ones. The trick is to find out who are the potential brand switchers or experimenters and find out what it would take to get them to try your products.