Case Study on Sony Corp
Table of Contents:
In this presentation, the competencies & strategies of Sony Corp has been mapped with three prominent Marketing theories – Schumpeter’s theory of “ Creative Destruction”, Michael Porter’s “ Generic Theories” and Michael Porter’s “ Five Competitive Forces Theory”.
Sony’s R&D strategy mapped with Schumpeter’s Theory
Schumpeter is popular for his original theory in 1911 that linked entrepreneurship with innovation in which he stated that an entrepreneur is an innovator that brings to table new ideas & innovations that result in the creative destruction of established monopolies. However, in 1942 he modified his theory stating that innovation can no longer be the realm of individual entrepreneurs due to the gradually building capitalism; rather shall be the forte of innovation professionals & laboratories controlled by management of large companies [Dejardin, Marcus. 2000]. This theory applies to Sony considerably given that the organization spends heavily in R&D across all the product lines. As per statement released in 2003 by Nobuyuki Idei, Chairman & CEO of Sony Corporation, the organization planned to spend 500 billion Yens (about 5. 1 billion US Dollars as per current rate) in three years to develop competitive key electronic devices through internal innovations although the organization invested 502 billion Yens (about 5. 12 billion US Dollars) in 2005 itself. [Sony Corporation, 2003; Sony Corporation, 2005]
Sony has been practicing creative destruction by forcing the old available products towards obsolescence by virtue of their innovations. One excellent example is the “ style” innovation of Sony latest Pocket Style VAIO P that is expected to yet again create a new niche segment for Sony that may force laptops to obsolescence especially in applications like Internet usage, word processing, multi-media & entertainment, messaging, Internet based telephony, etc. [Prokaza, Julian. 2009]
Sony’s Marketing Strategies mapped with Michael Porter’s Generic Theories
The following table presents the Porter’s generic strategies applied to marketing:
Cost Leadership Strategy
Focus Strategy (Low Cost)
Focus Strategy (differentiation)
[Mind Tools Limited. 2009]
Sony practices the strategy of Differentiation Strategy thus targeting niche markets where products are unique and sold at premium rates. They tend to develop unique market segments where there aren’t any competitions and the pricing strategies are totally in their own control. Walkman, Play Station, and now the Pocket Style Vaio P are examples of product uniqueness that Sony brings to the market. In these markets Sony is not bogged down by competition that practice Cost Leadership strategy.
Sony’s strategies against Porter’s Five Competitive Forces
Following is the model of Porter’s Five Competitive Forces [Harvard Business Review, 2008; Cliff, Bowman. 2008; Ankli, Robert E. 1992]:
Sony practices product uniqueness (differentiation) and achieves the same by virtue of huge investments in Innovation and R&D. This strategy ensures that Sony is well placed when mapped against the Porter’s five competitive forces model as presented below:
Threat of new entrants and substitute products & services: Sony’s strategy of continuously developing unique products and market segments keeps them shielded from new entrants in the market given that the level of R&D required to develop such products is huge and not easy for competition to introduce substitute products.
Rivalry among existing competitors: Sony hardly has any rivalry with competitors because their products are already priced at premium rates even in the market segments that are not unique to them. In few segments like televisions, however, they are facing the heat of cost leaders.
Bargaining Power of Suppliers and Buyers: Mostly, Sony manufactures products in their regular manufacturing locales. However, recently Sony outsourced LCD manufacturing to Taiwan but a close look shall reveal that this product is not unique from Sony’s perspective given the reducing prices. Overall, Sony is working towards trimming its product lines to focus on the products that support their niche market strategy. [MacManus. 2008; Reuters. 2005]
Given their premium branding and the R&D expenses to develop superior quality products, Sony hardly leaves any room for bargaining for the customers that are convinced to buy Sony.
This short paper has presented the mapping of Sony’s market & product strategies with the three popular models of marketing – The Schumpeter Effect, Michael Porter’s Generic Strategies and Michael Porter’s Five Forces model.
Ankli, Robert E. Michael Porter’s Competitive Advantages and Business History. Business and Economic History. 2nd Series. Vol. 21. 1992. pp230.
Cliff, Bowman. Generic Strategies – A Substitute for Thinking?. The Ashridge Journal 360o. Ashridge Business School. 2008. pp2-3.
Porter’s Generic Strategies – Choosing Your Route to Competitive Advantage. Mind Tools Limited 2009. Retrieved on 15 March 2009. Available at http://www. mindtools. com/pages/article/newSTR_82. htm.
Dejardin, Marcus. Entrepreneurship and Economic Growth – An Obvious Conjunction?. The Institute for Development Strategies. 2000. pp3.
MacManus, Christopher. Sony Insider. 2008. Sony to increase outsourcing of LCD manufacturing. Retrieved on 15 March 2009. Available at http://www. sonyinsider. com/2008/08/18/sony-to-increase-outsourcing-of-lcd-manufacturing/.
Prokaza, Julian. Hands on with the Sony Vaio P Series. Mobile Computer. 2009. Retrieved on 15 March 2009. Available at http://www. mobilecomputermag. co. uk/200901081191/hands-on-with-the-sony-vaio-p-series-a-900-netbook. html
R&D Strategies and Selection of Key Technological Fields. Sony Corporation 2005. pp25.
Sony Group Corporate Strategy for Fiscal Year 2003 – Confirming Sony’s Position as a Leading Global Brand. Press Releases. Sony Corporation. 2003. Retrieved on 15 March 2009. Available at http://www. sony. net/SonyInfo/News/Press_Archive/200305/03-023E/.
Sony to announce new business strategy on September 22. Reuters. 2005. Retrieved on 15 March 2009. Available at http://www. crn. com. au/News/20007, sony-to-announce-new-business-strategy-on-september-22. aspx.
The Five Competitive Forced that shape strategy. Harvard Business Review – On Line Version. 2008. Retrieved on 15 March 2009. Available at http://harvardbusinessonline. hbsp. harvard. edu/hbsp/hbr/articles/article. jsp? articleID= R080.
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