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Porter’s Five Forces (Porter’s Model) of Sony Corporation

Sony Corporation is one of the successful company across the globe from several decades. With its immense innovation and technology, it has created multibillion products and many electronic empires. Its products like VTR, radio transistors, LCDs, mobile phones and many others has changed the market demands and consumers lives. It is one of the biggest Japanese company, which has set the benchmark for global companies because of its business strategies. However, there is a fluctuation in the stock market of Japan, and also the slow growth of world economy, Sony is re-examining its business approach (Sony, 2019).

In order to analyze the changing pattern of the industry, Porter five forces model helps Sony in examining the market and industry with every aspect. The model is based on the corporate strategy approach which examines the threats and opportunities for the organization. Here is the detailed Porter five forces analysis of Sony;

Bargaining Power of Buyers:

There are two groups of buyers of Sony Corporation; one who purchase goods from retailers, second are individual customers. The first group like Argos or Curry has built long term relationship with the global brands like Kodak, Sony, Nikon etc. Thus, they have the high bargaining power as they offer their customers good value by checking the prices of competitors and offer exclusive deals. They also help the manufacturer in deciding which products to choose, and which products have more demand.

However, the second group of individual consumers have limited or low buying power as they do not have any direct impact on company. They buy products from the retailers and retailers are the one who get influenced by them (UK essays, 2018).

Bargaining Power of Suppliers

As per the fact that suppliers are high in the electronics industry, there bargaining power is low. Companies like Sony always look around for cheaper countries for imports like China or Taiwan. Some of the companies are moving their manufacturing facilities and premises to such countries, due to the price competition and cheaper factors of production. Sony has shifted its manufacturing to mass logistics from brand owners. This will help it in cost cutting in production sector. Moreover, many different companies from same industries are entering in electronic markets causes the suppliers low bargaining power (Sony, 2009).

Threats of New Entrants

Threats of the new entrants in the electronic industry are quite low because of the huge capitalization. New entrants have to build strong relationship with suppliers, and has to compete with competitors on high scale, which is very difficult. Constant innovation and high scale of economy is another limitation for the new entrants. In addition to this the policies of the government are difficult and different in every region, which makes it difficult for the global companies like Sony to operate. Moreover, Cellular phone industry is highly saturated, but Sony has well-established market, which reduces the threats of new entrants (Blogspot, 2014).

Threats from the Substitute Products

Threats from the substitute products are very limited in case of Sony Corporation, because of the products and quality it offers. However, the switching cost is very low, which increases the chances of consumers to switch to alternatives. Sony has developed a strong brand image and has loyal consumers who prefer the company because of its quality and low level of product differentiation. Sony has offered some products like Play Station which has no such substitutes because of the utility and popularity. Regardless of this, digital cameras of Sony are substituted with phone cameras, which increases the substitute threat (Pratap, 2018).

Rivalry of Existing Players

Sony has many strong competitors operating in the industry at global level, like Phillips, Panasonic etc. The competition between them is very high, which resulted in very short life cycle of products, low profitability due to high investments in R&D, and so exit barriers are high. To cope up this situation, Sony started to offer innovations and enhanced features in the products. Consumers prefer their required features in electronics regardless of the brand, in lowest prices. Sony is facing slow growth but intense competition (UK essays, 2018).

References

Blogspot, 2014. Sony Corporation (Porter’s five forces model). [Online], Available at: http://sonycorporation2.blogspot.com/, [Accessed on: 17th November, 2019].
Pratap, A. 2018. Sony five forces analysis. [Online], Available at: https://notesmatic.com/2017/11/sony-five-forces-analysis/, [Accessed on: 17th November, 2019].
Sony, 2009. Annual Report. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/SonyAR09-E.pdf, [Accessed on: 17th November, 2019].
Sony global, 2019. About Sony. [Online], Available at: https://www.sony.net/, [Accessed on: 17th November, 2019].
UK Essays, 2018. Sony Company Analysis: SWOT, PEST, 5 Forces and SGA. [Online], Available at: https://www.ukessays.com/essays/business-strategy/the-greatest-insight-into-that-sony-strategy.php?vref=1, [Accessed on: 17th November, 2019].

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