PS4 Situational Analysis Essay

Sony is a Japan based company that operates in over 180 countries worldwide. (Company Profile for Sony Corporation, 2011) Sony was co-founded by Masaru Ibuka and Aki Miruta in 1946 and since then has grown into an international multimillion dollar company (Sony Corporation, 2014). Ibuka and Miruta originally started out manufacturing measuring equipment (Sony Corporation, 2014), and have expanded into more complex technological solutions, such as laptops, gaming consoles, and communications devices. One product in particular is the PlayStation 4. The PS4 is the most recent of Sony’s gaming consoles and since its release at the end of 2013 has sold 7 million units (Plafke, 2013), raking in 45 billion dollars of revenue for Sony (n4g, 2014). The aim of this report is to assist Sony in identifying markets that they have the potential to enter. The report will include a situational analysis on Sony’s most recent product, the PlayStation 4. Through looking at the companyâ₠¬â„¢s current market, competitors and the external macro environment that has second hand effects on them. Furthermore, I will conduct a TOWS analysis, and then go on to make recommendations in relation to improving Sony’s corporate strategy. SITUATIONAL ANALYSIS: Market Analysis: The current market for technological goods and services is very high and will only rise in the future as consumers and other companies become more reliant on it for day to day use. Competitor Analysis: Sony has many different competitors because they are so diverse and have many different areas of technology in which they operate. An example of Product Competition is Microsoft, as they released their Xbox One just one month before the PS4 was released. They are in a similar price range, with the Xbox One selling for $750 and the PS4 selling for $650. Since the release of these gaming consoles last year, Sony and Microsoft have been neck in neck with sales volumes and profits, but it appears that overall Son has come out on top, with 7 Million units sold by March 2014 compared to the 6 Million sold by Microsoft. Another case of product competition is Samsung. Both Samsung and Sony produce innovative technology in the form of video solutions and televisions. Samsung’s strategy however, is to go for the  higher income consumers, while Sony targets the middle class. Sony has many competitors, but it handles them very well. Macro environmental Analysis: Political: A political factor that affects Sony is government law, and more specifically, minimum wage. This increases almost every year and causes Sony’s costs to increase. Sony also needs to take into account some of the substances they use to create their products. There are a couple of class 1 substances and several class 3 ones. The government in most countries have very strict laws about how to dispose the wastes. To comply with certain standards of operation, Sony bases its disposal of dangerous substances around the Japan’s pollutant Release and Transfer Register (Sony Corporation, 2014). Environmental: Despite being a large cooperation, Sony is very conscious of effects to the natural environment. The company Technological: Sony always tries to be at the front of technological change. This can be seen with their attempts to reduce the amount of resources in their products, epically the VAIO laptops. They recycle all of their wastes and their inputs largely come from recycled materials. Social: The social macro environment refers to how they relate to societal culture. This includes their employee and customer relations. In terms of employees, Sony has proven that they care about their staff, by providing them with numerous benefits such as health care. (Singh, 2010). Technological: This macro environmental factor can only be seen as an opportunity for Sony, as they are constantly creating new technological solutions and try to stay ahead of the curve. The company is often the one creating the newest technology, like in the case of the Walkman. (Sony Corporation, 2014). TOWS ANALYSIS: Threats: The main threat Sony faces is price competition from every angle of the market. The company is competing with Microsoft in the computer and gaming  consoles product area, then with Panasonic in the television and music department and with LG’s communications products. A second threat Sony faces relates to most of its production being in Japan. The company is susceptible to a fluctuating currency rate. For example the Japanese Yen has been steadily rising against both the US dollar and the Euro since November 2013 and experienced a 5% increase against the US dollar in December 2013. (OANDA, 2014). This made Sony’s imports to these countries from Japan seem relatively more expensive than products made locally. Another threat Sony faces is one relating to the specific product being discussed in this report. Recently the PS4 network was hacked, allowing users’ credit card details and other private information to be taken. (MacManus, 2012). Being vulnerable to attac ks from hackers is a very big threat for the Sony Corporation. Opportunities: The Sony brand has been given many opportunities. One of these is that Blu-ray is become increasingly more popular, which gives Sony the opportunity to make these players as cheaply and efficiently as they can. A second opportunity is their partnership with the big gaming franchise Fifa. This enhances Sony’s corporate value. Weaknesses: One weakness of the Sony Corporation is its location. Almost its entire manufacturing takes place in Japan, which means it is very far away from 60% of its other consumers. A second weakness is that the company’s revenue appears to be decreasing over the past several years, with revenues falling constantly by just under 20%. (Sony Global, 2012). Strengths: One strength of the Sony brand is that its name is very well established and is internationally known as a household brand name when it comes to technology. These deep roots allowed it to take 29th place at the InterBrands in 2009, (InterBrand, 2009) which means that comes to the mind of a potential consumer before a company competing for brand recognition. A second strength is that it is an internationally recognized company, with almost products and services available in almost 200 countries throughout the world. For example, Sony receives revenue from all over the world, for example, in the 2012 financial year the company received 18% of revenues  from the United States, 14% from Europe, 42% from Japan and 25% from other countries. (Sony Global, 2012). This example of market diversification is a strength to Sony’s cooperate strategy because it minimizes and even offsets impacts of adverse macro conditions (e.g. economical) that may occur in one region of operation. TARGET MARKETS: Sony’s overall target market is very broad. They aim their products at upper middle class people in developed countries. These people earn an average salary and Sony prices their products accordingly. The specific product I am researching, the PS4, has a slight more specific target market. This product is aimed at the younger generations, people under 30. Their marketing was directed towards â€Å"gamers in every sense of the word† (Placeholder2). RECOMMENDATIONS: One recommendation I would make to the Sony Corporation is to consider market development, where they sell their lower budget products in places like India. For example, Samsung sells their cheaper headsets in India because there is a high demand. If Sony did this they would increase their market share and gain a whole new chuck of consumers. BIBLIOGRAPHY Company Profile for Sony Corporation. (2011). Retrieved from in.reuters: http://in.reuters.com/finance/stocks/companyProfile?symbol=SNE.N InterBrand. (2009). InterBrands 2009. Retrieved from InterBrand: http://www.interbrand.com/en/ Joseph, S. (2013, November 18). Sony to Switch PS4 Marketing from low key to high impact. Retrieved from Marketing Week: http://www.marketingweek.co.uk/news/sony-to-switch-ps4-marketing-from-low-key-to-high-impact-in-2014/4008590.article MacManus, C. (2012, October 24). Sony’s PlayStation network hack. Retrieved from cnet.com: http://www.cnet.com/news/sonys-playstation-3-experiences-its-biggest-hack-yet/ n4g. (2014, March 28). PS4 reaches 7 million worldwide. Retrieved from n4g: http://n4g.com/news/1483878/ps4-reaches-7-million-worldwide-as-infamous-second-son-sells-a-million-at-launch OANDA. (2014). Historical Exchange Rates. Retrieved from OANDA: http://www.oanda.com/currency/historical-rates/ Plafke, J. (2013, November 28). PS4 sale make more pr ofit for AMD than Sony. Retrieved from geek.com: