Differentiated Services for Sony

The industry is highly competitive and dynamic, with companies like Sony facing challenges in maintaining their brand value and reputation. The report highlights the need for Sony to implement differentiated services such as mobile app ordering and drone delivery, as well as innovative strategies in product development to stay ahead of the competition. Additionally, it recommends that Sony use its brand name and logo sparingly on high-end products only, to enhance its lost reputation and image. This strategy is based on the consumer behavior pattern that people value what they don't have easily, making them feel precious when it's readily available. The report concludes that Sony needs to improve its strategic business units, innovation in product development, and brand image to turn around its fortunes.

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Table of Contents
Executive Summary:..................................................................................................................2
Introduction:...............................................................................................................................2
Company background:...........................................................................................................2
Mission & Vision:..................................................................................................................3
Company business:.................................................................................................................3
Products & services:...............................................................................................................3
Consumer products & services:.............................................................................................3
Professional products & services:..........................................................................................3
Key strategic issues:...................................................................................................................3
Recommended actions:..............................................................................................................6
Conclusion:................................................................................................................................8
References:...............................................................................................................................10
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Executive Summary:
This report elucidates a case analysis on Sony, which is one of the most renowned
multinational electronic companies globally. The case reflects some of the key strategic
issues that are acting as major loopholes to the expected success of the brand in global arena
and offers suggestive recommendations to the management such that prudent policies can be
implemented by the management to improve the situations and thereby put the brand back on
track once again as it has been few decades back. Specifically, three key issues faced by Sony
in its global supply chain have been analyzed and plausible recommendations have been
offered to ensure that it continues to be one of the global leaders in the electronic sector as it
used to be when it was launched in the global markets.
Introduction:
This report contains information on Sony Corporation, one of the leading electronic dealers in
the world. The company operates successfully globally owing to its immaculate strategic
decision-making in diverse domains such as marketing, operational and supply chain
activities that ensure the highest possible quality of products are supplied to the target
customers at the right place and at the right time through its highly efficient global logistics
and supply chain strategies. In this regard, it is essential to discuss about the background of
the company, its mission and vision, the business activities and the key products and services
that it produces and supplies across its global supply chain. The report will discuss about the
details of some key strategic issues that are being faced by the company and offer plausible
recommendations to improve the scenario so that the company is once again headed in the
right direction.
Company background:
Sony Corporation happens to be a Japanese electronic manufacturer and dealer that is
considered to be one of the leading brands in the world currently. The organization was
established on 7th may, 1946, around 72 years ago. The company is headquartered in Tokyo,
Japan. The founders of the company are Masaru Ibuka and Akio Morita. Kaz Hirai is the
Chairman and Kenichiro Yoshida is the current President and the CEO of the organization.
The brand serves to all locations around the world. There are around 1,17, 300 employees
working in the company around the globe. The company made a net income of around ¥507.6
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billion in 2017 and earned a revenue of around ¥6,593 billion in 2017 (Sony Corporation,
2017).
Mission & Vision:
Sony has the mission of being a corporation that seeks to inspire and fulfill the curiosity of
every customer. The company strives to offer unmatched technology, content and services to
the customers. The continuous pursuit of innovation and creativity is one of the major
constituents of the mission of the global giant. The vision of the company is to create new
and unique cultures and experiences for the customers such that through every product and
service, the brand can emotionally move the customers (Sony Corporation, 2018).
Company business:
The business of the company is spread across a wide range of products and services that are
considered to be some of the best in terms of quality, usability and variations. The global
brand is into a wide range of products and services that it has achieved through its effective
differentiation and diversification strategies that have offered the competitive edge to the
brand across several international markets.
Products & services:
The company offers a wide portfolio of products and services to the customers that can be
categorized into the consumer products and services and the professional products and
services.
Consumer products & services:
The consumer products and services from Sony consist of a large category of products such
as televisions, digital cameras, laptops, headphones, smartphones, video games, gaming and
network services, financial services, etc.
Professional products & services:
The professional products and services consist of entertainment solutions, sports solutions,
active learning, healthcare solutions, video security, projectors, medical monitors,
camcorders, professional displays, motion pictures, etc. (Sony Corporation, 2018).
Key strategic issues:
Sony implements the Strategic Business Unit (SBU) form of doing its business activities
around the world. So, the company operates along a multidivisional structure and for
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maintaining the seamless flow of business operations across all the SBUs, it has to adopt the
diversification strategy such that it can offer new and innovative products and services to the
consumers. Achieving diversification helps an organization to start a new line of products and
services that are different from the existing ones and therefore help to keep the existing
customers attracted and also draw the attention of new customers towards the brand. The
ultimate objective of the diversification strategy is to ensure that the company is able to grow
in market size and share and continue to enjoy the competitive edge in the industry. Hence,
diversification strategy helps a business establishment to implement new and innovative
strategies of doing business by offering line of products or services that are not offered by
some of the other competing brands (Ajima, 2015).
To remain competitive and sustain in this extremely dynamic business environment, it is
essential for every organization to be different than the others in a manner that the customers
find the products and services of the brand unique as compared to the major competitors.
Therefore, launching some creative and innovative products in the market that the brand
generally does not associate with helps to attract the attention of the brand loyal customers
and also the new ones (Martin Roll Company, 2015). The brand loyal customers stick to the
products and services from their loyal brands, but if new and innovative products can be
offered to them, then they will begin to trust the brand more and there will be increasing
probability for them to remain attached with the brand. The electronics sector is highly
competitive, and the rivalry is intense, so a business organization akin to Sony that is a global
multi-brand, it is essential to adopt continuous innovation in products and services and this
can be achieved through comprehensive research and development of the target market.
Competitor analysis and situational analysis help the business to determine the offering of the
competitors and also the current situation in the industry based on which the management
will be able to undertake crucial decisions in the domain of business and functional strategies
of the organization. The strategic analysis of Sony has revealed some of the key strategic
issues that are currently being encountered by the company. They are as follows:
1. Unsuccessful diversification strategy and issues with strategic business unit model of
Sony:
The corporate level strategy of Sony consists of the SBU structure which is further divided
into three levels such as the corporate headquarter, the SBUs and the SBU divisions. The
divisions within each of the SBUs of Sony have shared products and markets but those in the
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subdivisions of each of the SBUs have very less in common as compared to the sub-divisions
of the other SBUs. However, one of the major issues that have affected the diversification
strategy of Sony across the SBUs is the lack of effective coordination between the SBUs
which a structural fallacy of the SBUs due to which desired cooperation is not being achieved
by the company to conduct its diversified business activities effectively. This is causing a lac
k of profitability for the company in different sections. The company is facing a problem
where there is lack of frequent and proper contact among the divisional managers, absence of
liaison roles in each of the divisions and lack of formation of effective work teams that could
work temporarily in close coordination to achieve certain common shared objectives of the
company. There are clear evidences of the lack of ability of the divisional managers to
facilitate effective coordinated efforts at the interdivisional levels. The reward systems for the
divisional managers functioning in the strategic business unit format are unsatisfactory that is
causing lack of motivation for many divisional managers due to which their productivity is
diminishing which is one of the major strategic concerns for the company management
(Bhasin, 2012).
2. Lack of innovation in products and services at Sony:
The other major strategic issue that Sony is facing in its global market is the lack of a hit
product among its portfolio for several years on a trot. Since the production of the innovative
‘Walkman’ series by the company, there has been no significantly innovative products that
the company has designed other than its highly popular ‘PlayStation’ brand that has achieved
significant level of popularity and has been a highly profitable product for the company.
Following the launch of these products, there has not been any significantly innovative
product from the brand that has captured the imagination of the consumers so much so that
the company has been able to make high profitability from its diverse portfolio of products
and services. Thus, lack of innovation and creativity is one of the primary strategic issues that
Sony is facing since decades and absence of any effective resolution strategies has made this
issue a concerning one for the management (Fortt, 2012).
3. Diminishing brand value and brand image:
Another key issue emerging out of the strategic analysis of the company is that Sony is losing
its brand value and reputation fast. This is occurring as the company is using its coveted and
reputed brand symbols and logos on all kinds of products and services irrespective of their
perceived value to the consumers. As for example, products such as computers, televisions,
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cameras, laptops, toys, digital book readers, music players, gamin consoles, etc. carry the
exclusive brand of Sony. They are also being used on movie-studio and music label. The
scenario for Sony with its brand image is such that today all the high-end as well as the low-
end products from Sony carry the brand of Sony. This strategy has been instrumental in
diminishing the value and image of the brand in the eyes of the consumers. On each occasion
the company launches a new product, it comes with the Sony logo and this act is backfiring
on the company as a major imprudent decision that the management has undertaken that is
significantly contributing to the downfall of the brand on a global scale. This has lowered the
meaning of the brand to a large number of customers that do not consider Sony to be
something more than just an electronic dealer. Another flip side of this loss of brand image
and brand value for Sony is that the company is not able to charge premium prices on its
much coveted and high-end products as it used to when the company was in its prime. Thus,
looking at all the discussed strategic issues, it is essential and obligatory for the management
to come up with effective strategies that could change the fate of the brand and put on the
right track once again from where it can start once again to be considered as a sought-after
electronic brand and most importantly might succeed in enhancing its growth, profitability
and sustainability in the long run (Boström, 2018).
Recommended actions:
The analysis of the strategic issues faced by Sony have revealed three major shortcomings in
the corporate and functional strategies of the brand that need to be resolved immediately such
that the brand does not continue to lose its worth in this competitive global electronics
market. The following recommendations might be suggested to the management such that the
aforesaid problems can be successfully mitigated:
1. The management of Sony should enhance the frequency of direct contacts between
the divisional managers of the company that are working under the several sub-
divisions of the SBUs at different locations. In each of the divisions, the management
should foster roles encompassing liaisons along with the development of several
temporary work teams in several projects of the company such that all the employees
in diverse departments can share their skills, expertise and competencies and most
importantly develop better understanding of each other through frequent mixing. It
will help to enrich the work culture of the employees and make then tolerant towards
each other and at the same time work as a unit on the several projects of the company
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that need to involve all the SBUs together for a holistic success of the brand in its
global markets. Apart from this relationship building among the employees and the
divisional managers to encourage coordinated efforts, the management should
implement more lucrative reward systems for the employees on the overall
performance of the company apart from the results achieved by the individual
divisions, such that there is more employee motivation and increased teamwork and
coordination among the divisional managers and their subordinates under the form of
the strategic business unit (SBU) that is followed by Sony. The management needs to
align its international business strategies along with the organizational structure such
that there is effective coordination and control of the global operations of the brand.
Focus should be invested in achieving economies of scale at a global level.
2. To counter the lack of innovation that Sony is facing over many years, the
management needs to undertake prudent research and development in the field of
electronics and other sectors such that the brand is able to become innovative once
again. For achieving this, the research and development department needs to be more
active and dedicated to study the global market conditions in terms of the kinds of
products and services that the electronic goods customers prefer and most importantly
analyzing the portfolio of products and services that are being offered by the rival
brands. The management of Sony must not involve in too much of diversification with
its products and services such that the focus of the management becomes confusing
and it fails to put the required emphasis in developing successful strategies for the
marketing of each category of products and services (Meyer, 2017). The management
should undertake innovation and creativity in developing products and services that
are in demand globally. It should invest behind prudent innovation such that there is
effective return on investment behind the innovative product or service development.
The products and services that are proving to be non-profitable of where the margin of
profitability is too low, should be called off by the brand as they will continue to
increase the costs to the company and diminish the overall profitability of the brand.
The management should also think about implementing the differentiation strategy on
some of its products and services in order to gain competitive edge. Differentiation
refers to the adding of a unique element in a product or service that differentiates it
from similar products or services being offered by the rival brands in the industry.
Sony can implement differentiated services such as utilization of mobile apps for
ordering and delivering products and services to the customers and also undertake
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technologically innovative services such as drone delivery of some products that is
gaining popularity in different parts of the world today (Springer, 2009).
The utilization of the brand logo and the brand symbol which are trademarks for Sony should
be used sparingly on products rather than each and every product that is being launched by
the brand across its global supply chain. The use of the brand name and symbol should not be
undertaken on the products and services that belong to the low-end category. Sony should use
its brand name and logo in case of the high-end products and services only. This will help to
enhance the lost reputation and the image of the brand in the minds of the consumers. The
reason behind this strategy is that if people start receiving things that are coveted and scarce
quite frequently, then they will soon start underestimating the value or utility of the thing.
This is a consumer behavior pattern that is observed on several occasions in today’s dynamic
consumerism. People like to have more of something that is scarce. It makes them feel that
they have access to something that is really precious and is not acquired by many others
around him (O'Kane, 2012). The moment, a person feels that a precious thing is readily
available, its value and utility will decrease. This theory is well applicable in case of Sony
that has suffered severe loss of brand value and image due to the over-usage of its brand
name and symbol on several categories of products and services. Hence, the management
needs to be aware of the usage of the brand name ang logo of Sony only on the high-range
products so that the customers perceive the brand as one that is highly sought-after. This is
needed to enhance the lost brand value and reputation of Sony that is having a significant
impact on its growth and profitability.
Conclusion:
In conclusion, it can be said that Sony Corporation is one of the leading electronic
manufacturers and dealers in the contemporary global electronics market. The brand is
considered to be highly coveted by customers in different parts of the world owing to the
decades of trusted and high quality of products and services that are being offered by the
brand to the consumers in different parts of the world. The company has been successful with
its strategic decision-making initially and performed exceptionally well in the initial years of
operation. But, of late, Sony is troubled by several strategic issues that are impacting on the
growth, profitability and sustainability of the brand in the global arena. First, the Strategic
Business Unit (SBU) model of operation lacks coordination among divisional managers that
is resulting in lack of coordinated work on several projects that affect the organization.
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Second, the lack of innovative strategies in product development since decades is acting as a
barrier towards growth and expansion. Too much of diversification is indulged in that shifts
the focus from each of the brands and quality suffers. Last, but not the least, Sony is troubled
by the diminishing brand image and value due to over-usage of its brand name and brand
symbol on all products. Thus, to improve the current state of the brand, the management has
been offered with some recommendations that can turn the fortune for Sony.
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References:
Ajima, S., 2015. Sony faces struggle to find growth path. [Online]
Available at: https://www.japantimes.co.jp/news/2015/02/20/business/corporate-business/
sony-faces-struggle-find-growth-path/#.W5pIUOgzZPZ
Bhasin, K., 2012. This Is The Biggest Problem With Sony's Brand. [Online]
Available at: https://www.businessinsider.com/this-is-the-biggest-problem-with-sonys-brand-
2012-4?IR=T
Boström, J., 2018. DIMINISHING BRAND LOYALTY AND THE ABSOLUTE VALUE OF
THE PRODUCT. [Online]
Available at: https://www.inriver.com/library/blog/diminishing-brand-loyalty-and-the-
absolute-value-of-the-product/
Fortt, J., 2012. The Problem With Sony's Plan. [Online]
Available at: https://www.cnbc.com/amp/id/47033064
Martin Roll Company, 2015. Sony – The Battle To Stay Relevant. [Online]
Available at: https://martinroll.com/resources/articles/strategy/sony-battle-stay-relevant/
Meyer, P., 2017. Sony’s Generic Strategy & Intensive Growth Strategies. [Online]
Available at: http://panmore.com/sony-generic-strategy-intensive-growth-strategies
O'Kane, C., 2012. Moving Beyond Differentiation: Why Diversification Can Evolve The
Agency Economic Model. [Online]
Available at: https://www.exchangewire.com/blog/2012/11/15/moving-beyond-
differentiation-why-diversification-can-evolve-the-agency-economic-model/
Sony Corporation, 2017. Consolidated Financial Statements, s.l.: s.n.
Sony Corporation, 2018. About Sony. [Online]
Available at: https://www.sony.net/SonyInfo/
Sony Corporation, 2018. About Sony. [Online]
Available at: https://www.sony.net/SonyInfo/
Springer, 2009. Differentiation and Diversification. In: The Dynamics of Change in Higher
Education. . In: Higher Education Dynamics, vol 27; https://doi.org/10.1007/978-1-4020-
9248-0_3. s.l.:Springer.
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