Video game consoles industry is one of the fastest developing industries in the world. Various firms have come to realize that this industry is profitable. This explains the influx of multinational firms into the industry. As a result of this influx, there has been increased competition in the market both in developed and developing countries around the world. Sony is one of the firms in this industry that has come out strongly as a company that has the capacity to deliver products that are able to meet market demands. Although this firm is operating in a highly competitive market, this firm has been able to outsmart this competition and come out strongly as a preferred firm in the industry, especially in the battle for supremacy in this industry in 2008. This firm has achieved this because of its strength as a firm and the opportunities it has found in the world market. However, its weaknesses and threats in the market have impeded its growth to a given degree. It is, therefore, important for a firm operating in this industry to have enough resource and a high level of competence in order to manage this competition.
SWOT Analysis of Sony Corporation
SWOT analysis is always a very important tool that helps in determining the internal ability and weaknesses of a firm, and the opportunities and threats that are available in the external environment. This analysis will help in understanding this firm, and in knowing some of the factors that have propelled it to its current position in the market.
Strengths and Weaknesses of the Company
Sony Corporation has some special abilities that can be considered its main strength in the video game consoles industry. The ability of this firm to diversify in its production of video game consoles in the market is a special ability that makes it stand out in the world as one of the few firms in this industry to diversify its products within the market. Sony has been introducing different series of video game consoles to the market at regular intervals. This firm targets the middle class with the majority of its products given its pricing of the product. This was a strategic move because this is the largest customer group for this product. The strategy to target the middle class has also helped this firm in entering the developing countries, especially in Africa and parts of Asia. The management developed strong marketing strategies in acquiring markets both in the developed and developing countries. This firm has successfully conducted massive research on the market for this product. The firm has been able to understand the needs of the market, and this has given it leverage over its competitors when it comes to customer satisfaction. The ability of Sony to enter the Chinese and Indian markets successfully was seen as a sign of strength for this firm.
Entering the Chinese market had been challenging due to the government policies that did not favour the products manufactured by Sony due to the competition it posed to the local electronic firms. To help it succeed in this industry, this firm has come up with a quality control unit in all its subsidiaries in order to ensure that it delivers quality products to the customer. Ability to deliver quality service to the customer has made it develop a special niche in the market, making its products popular across the world. The firm is also one of the first firms that embraced value chain management (Viardot, 2004, p. 78). Through this, the firm has been able to continue satisfying its customers at a cheaper cost. The ability of this firm to adopt emerging technologies has been considered as a strength by other firms. Sony PlayStation 3 is one of its recent products that demonstrates its capacity to deliver special satisfaction to its customers by bringing products that are a little beyond the expectations of the market.
Despite the above strengths for this firm, it has some weaknesses that have impeded its growth to a given degree. One of the main concerns that this firm has not addressed properly is the issue of environmental management (Montiel 2011, p. 47). The components of the products of this firm are known to be very dangerous to the environment. E-wastes from video consoles pose a serious threat to the environment, a fact that has earned this firm criticism from environmentalists. The manufacturing plant of this firm also poses a serious challenge to the environment. This firm has been criticized, alongside other firms, to be leading in the pollution of the environment through their products. This firm is yet to come up with a clear structure on how it can manage environmental pollution caused by its wastes around the globe (Liker 112). The firm has claimed that it has been engaging in corporate social responsibility. However, this has not been enough to make the public believe its commitment to a cleaner environment.
Another conspicuous weakness of this firm has been manifested its way of managing crisis. It was a noble move for this firm to recall some of the video console game in 2006 when it was reported that some of its laptop batteries exploded. The recall of the video game was because of the fact that the same technology was used in developing video games. However, the way this firm communicated this information to the public developed some mistrust among a section of the market. There was a created notion that using some of the consoles game from this company required a lot of precaution. This would put off some of the potential customers of this firm. Despite the good intention that the company had, this firm was fined by the American government for violating the laws of operation in this land. The firm earned the fine because it failed to follow the set of regulatory policies in this country. Although the firm was not fined in other countries around the world, the incident developed some form of suspicion towards the firm. This would translate into negative consequences to the firm in the market.
Opportunities and Threats
In every industry, there are always opportunities and threats that a firm may come across in the external environment. There are various opportunities that exist for Sony Corporation in its operations in the global market. One of the opportunities that this firm has had is an expansive and unexploited market in third world countries. Most of the firms in this industry have focused their effort on building large bases of loyal customers in the leading economies like the United States and the European markets. This firm has managed to tap into the emerging markets in African and parts of Asia. The stable economic growth in the major economies means that there is increased opportunity for this firm to increase its sales in such countries as the American markets and the markets in Europe. There exists a massive market in the developing economies that give this firm an opportunity to expand. Sony is one of the largest video game consoles manufacturer and distributor in the world. The firm has massive opportunities in developing nations. According to Bissoondoyal (2006, p. 54), developing nations are becoming very attractive markets for video game consoles manufacturers in the world. To Sony, this market offers the firm increased opportunity to increase its production. This increased market share offers this firm an opportunity to grow in asset base.
This growth of the economy means that the consumers will always have enough to spend on luxury goods such as Sony PlayStation 3. There is an interesting trend in the market where this firm is competing with Nintendo for the market share of video game consoles. The Sony PlayStation 3 and Nintendo DS have been competing in the market for supremacy. Although this may be considered as a threat, this competition has offered the two firms an opportunity to acquire a special niche in the industry, outsmarting some of the industry giants like Microsoft. The emergent of an economically empowered youth around the world is also another opportunity that this firm has been able to exploit. With an economically empowered youth, this firm can generate a lot of benefits through increased sales.
Advancements in technology form another opportunity for this firm. The world is increasingly getting sophisticated due to the development of technological innovations. With Total Quality Management as its bedrock, this firm has been able to take advantage of the opportunity offered by technology to expand its market. Sony was one of the firms to develop websites with all important information about the firm. As development in information and communication technology took shape, this firm was keen to grab this window of opportunity. This firm is one of the few multinational firms that embraced social media marketing when it was introduced. The firm is developing a system through which most of the product sales would be made through online means. This will reduce the current labour force of this firm (Chaston 2009, p. 18). It will also increase its market coverage.
There are threats that exist in this industry that is worth noting. Technology is probably the main threat that this firm faces in this industry. Sony Corporation has used technology to reach its current position. It is one of the few firms that have managed to adapt to emerging technologies very fast. However, it is a nightmare trying to figure out what some of the competitors can do with this same technology. Another biggest threat that this firm face is the stiff competition posed by rival firms. This industry is one of the most competitive industries in the world (Handlechner, 2008, p. 28). Any slight mistake by the firm may result in a situation where its market share is taken over by other rival firms.
Another threat that is currently coming out is the policies and regulatory laws in some of the markets that this firm operates. This has resulted in huge loses to the firm. For instance, when Sony recalled some of its products in the year 2006, the US government fined this firm million dollars for this incident. Such regulations by governments in these countries may cause serious losses to the firm that may force it out of the market. When the laws are too strict to this firm, it may affect the normal operations of this firm.
Evaluation of SWOT Analysis
The SWOT analysis above shows that Sony Corporation is in a very strong competitive position in the market. The firm is in a sound position to compete favourably with other firms and achieve desired results. The firm can easily continue pursuing its current strategies profitably. In order to turn its weaknesses into strength, this firm should consider increasing its campaigns on environmental conservations. This can be achieved by developing new strategies taking into consideration the currently prevailing circumstances (Hooley 2008, p. 112). This will help it strengthen its brand in the market. A strong brand builds a certain level of trust on the side of the consumers, who can be able to make predictions concerning the quality of the product or the performance of the product. In this regard, they can be able to identify with the brand as a sign of pride or prestige. It is very beneficial to have a concrete positioning of the company’s services or products so as to build up a strong brand. There is, however, a big difference between the branding of the product and positioning of the brand. Forming a strong brand for this product will make it strong in the market.
The Resources and Competencies That a Company in the Video Game Consoles Industry Needs to Possess in Order to Achieve Competitive Advantage
Competitive advantage is an advantage that one firm has relative to competing firms. The market is increasingly becoming competitive as new firms come up with products that already exist in the market. In order to counter this stiff competition, companies in the video game consoles are always under pressure to develop a competitive advantage that can enable it to outsmart its competitors. According to Montiel (2011, p. 87), a firm should always develop short-term strategies that would put them at a better competitive position than its competitors. This would mean that such a firm would devise strategies that would enable it to meet the market demands in a better and more creative way than its competitors and enhance its competence is serving its customers. Chaston (2009, p. 117) says that in the current society, a permanent competitive advantage does not exist. This is because a strategy that a firm uses to give it a competitive advantage does reach its competitors after a short while. Competitors would then use the same strategy or come up with counter-strategies that would render the strategy irrelevant. A firm should, therefore, come up with short-term objectives, and with each objective, there should be a clear short-term strategy that would give the firm leverage over others in the market. By the time competitors would be learning of the competitive advantage this firm has due to the strategy, the objective shall be achieved, and the firm would be moving to the next objective.
This way, a firm would ensure that it maintains a competitive advantage in the market by ensuring that it is always unpredictable in this market. Gaining competitive advantage means that the firm would be in a position to gain a market share within the market it operates. According to Hooley (2008, p. 56), firms in the United Kingdom have suffered from the inability to get a sustainable competitive advantage in the market. They would develop a competitive advantage within the first years of their inception. As time goes by, this competitive advantage would wear out as competitors get to understand and apply it. These firms would fail to come up with new innovative strategies, and this explains the reason behind their early departure from the market.
It is important to a deep understanding of the resources that would be necessary for the firm to develop a competitive advantage. It is, therefore, necessary to bring a theory that would help understand and justify this concept. Although this may fit with a number of theoretical frameworks such as resource-based theory, transaction cost theory, and strategic adaptation theory, it is especially convenient to use resource-advantage theory. The development of the theory of resource-advantage deals with issues such as identifying an opportunity, mobilizing resources, and organizing the institution. Bissoondoyal (2006, p. 125) illustrate that resource advantage theory clearly allows for both conventional approaches to marketing and for entrepreneurial marketing. In addition, the trend of contingency theory of organizations is associated with the argument that the internal functioning of work organizations must be consistent with the demands of organizational tasks, technology or external environment, among others.
This theory is particularly important because its emphasis on the use of the existing resources to gain a competitive advantage that would result into increased new resources of a firm. It is a fact that the level of resource of a firm will determine its competitive capacity within the market. This is because most of the strategies that a firm would come up with require some level of financing. With a well-established resource base within the firm, it becomes easier to implement strategies that would make the firm more competitive. It is important therefore, that a firm develops a resource advantage within the firm. This is one of the strategies that would help give a firm in the video game consoles industry a competitive advantage over other competitors in the market. According to Hooley (2008, p. 37), it is important to note that the ultimate aim of entrepreneurial marketing is to ensure that a firm has constant competitive advantage in the market that would allow it a competitive edge. This can best be supported by resource-advantage theory. This would enable the firm counter many of the challenges that may affect its marketing strategies. Chaston (2009, p. 26) says that such resources should not just entail financial resources. A competent human resource base forms another important resource that would help a firm achieve its objectives. The employees should be competent enough, and with the determination to offer the firm the best service in order to realize this success.
In this industry, a firm also needs an appropriate supply chain strategy. The management should have a clear supply chain strategy that would ensure that its products reach the market within the expected time. In 2006 when Sony was introducing its new product PS3, it was only able to deliver between 125,000 to 175,000 units into the North American market instead of the desired 400,000 units. This was because the firm did not have appropriate logistical capability that would allow it deliver the product as expected.
The video game consoles industry is one of the fastest developing industries in the world. With giant firms like Sony, Nintendo, and Microsoft Corporation being the main players, the level of competition is very high. However, SWOT analysis on Sony shows that it has a competitive advantage over other firms in this industry.
List of References
Bissoondoyal, U 2006, Total quality management: a practical approach, New Age International, London.
Chaston, I 2009, New Marketing Strategies: Evolving Flexible Processes to Fit Market Circumstance, Sage Publications, London.
Handlechner, M 2008, Marketing Strategy, GRIN Verlag GmbH, München.
Hooley, G 2008, Marketing Strategy and Competitive Positioning, FT Prentice Hall, Harlow.
Montiel, P 2011, Macroeconomics in emerging markets, Cambridge University Press, Cambridge.
Viardot, E 2004, Successful Marketing Strategy for High-Tech Firms, Artech House, Boston.