Porter's Five Forces Model and Porter's Value Chain on Sony as an organization

1. CORPORATION
Porter's Five Forces Model and Porter's Value Chain

2. Porter’s Competitive Strategy Models
Five Forces Model and Value Chain are two of the competitive strategy
models contributed by Michael E Porter of Harvard University Professor
‘s of Harvard Business School. The two models was created in 1979.
Porter five forces analysis is a framework for industry analysis and
business strategy development.
In Porter's value chains, Inbound Logistics, Operations, Outbound
Logistics, Marketing and Sales and Service are categorized as primary
activities. Secondary activities include Procurement, Human Resource
management, Technological Development and Infrastructure.(Porter
1985, pp. 11–15).

3. Organisation Chosen: Sony
Company Overview and History
Sony Corporation has history over the past 60 years in development,
design, manufacture, sales of electronic equipment and devices as well
of game console and software. Sony has now expanded their business
horizon to marketing, manufacturing, television product as well as
entertainment industry in motion picture and recorded music.
The pass 20 years Sony has become inventor and making profit. They
have produce power megaphone, first magnetic tape recorder prototype
called G-Type, first transistor radio, produce the smallest transistor
radio in commercial production at the time, videotape format, color TV
system, Walkman, world first CD player, Discman, cameras, camcoders,
Vaio series PC, PlayStation, from home audio, media to robots.

4. Porter’s Five Forces Model for SONY
Threat of New
Entrants
Intensity of
competitive
rivalry
Threat of
substitute
products or
services
Bargaining power
of customers
(buyers)
Bargaining power
of suppliers

5. Intensity of competitive rivalry
• Since Sony’s market segment includes Electronic, Game, Pictures,
Financial Services and Joint Ventures. For the past 5 years, among
Sony’s existing and potential competitors like Samsung, Apple,
Foxcon and Hitachi.
• Within Electronic segment has lost much of their market in
audio. MP3 players and iPods have replace Sony’s Walkman. Blu-
Ray competes directly with HD-DVD technology, while Blu-Ray
offer crisper picture and more storage capacity, this technology is
twice expensive than HD-DVD. PlayStation sales has problem
with cost, even though it offers superior graphic, Nintendo and
newer version of android games witness faster sales then Play
Station.
• Sony leads market with Bravia line of LCD TV. They hold
competitive cost over the rest of LCD market.
• Segment analysis indicate that Sony will suffer loss in profit. The
rivalry will not show any weakening sign in near future.
• Sony needed to focus on technological innovation, high end
design and product differentiation from the rivalry. Sony also
need to reduce cost and keeping the price low like the
achievement they have gain in producing LCD market. Sony
should improve loyalty amongst customer as customer purchase
is not uniformly across Sony products.
HIGH

6. Threat of New Entrants
• Profitable markets that yield high return will attract new firms.
However, not many company will seek to compete with Sony
because of the cost will be too high to compete with the
electronics giants that already exist.
• A small player will also require strong relation with suppliers and
efficient manufacturing processes otherwise they could not
produce at low cost.
• Sony is currently the 4th rank in ‘The 100 Most Loved Companies’
by APCO worldwide and it is also one of the top 10 Best Global
Green Brands that consumers associate with environmental
conservation and sustainable business practices. This may attract
consumer to be loyal to Sony brands and attract new buyer of
those who support green product. This is a competitive threat for
new industries to attract customer loyalty to establish brands.
• Patent right and government regulation keeps the threat of new
entries low.
LOW

7. Threat of substitute products or services
• Although Sony has tries to differentiate their
products through modern design, high quality
graphic and superior technology, they still have
threat of substitute product like iPod over Sony
Walkman, iPad or Android or Tablet Game over
Sony PlayStation, and HD DVD over Blu-Ray.
• Substitution like music download or streaming
cause an effect on Sony recording music industry.
• Since the price is high consumer switching to
other products which is close to the substitute.
• Sony need to think about competitors and
customer loyalty too, so people can choose Sony
over other substitute.
HIGH

8. Bargaining power of customers (buyers)
• Customer have a choice of electronics
product that they want to choose.
• Beside Sony there are plenty of electronic
business that are doing the same product
as Sony like LCD, PlayStation, Music
Recording, Tablets and also Notebook.
Therefore customer bargaining power are
very high. HIGH

9. Bargaining power of suppliers
• The company that support and supplies
parts for Sony.
• There are a lot of company that sells
electronic parts which Sony can choose
from. These companies rival with others
to propose with lower price of parts.
Therefore the bargaining power is very
low. LOW

10. Porter’s Value Chain for Sony
Sony is committed to conducting its operation socially and environmentally
responsible manner to supply product out of the premises into the hands of
customer.

11. Primary activities
1. Inbound logistic
• Getting raw materials into receiving should be done in
effective and efficient manner to receive more raw material
to increase productivity in production sector.
• The raw material should be as safe as possible to
environment to make Sony as respectable environmental
productivity to gain customer trust and interest.
• Sony should also ensure that they have a warehouse in the
production sector to avoid shortage of raw material.
2. Operations
• If the planning is followed in inbound logistic, the operation
can be increase.
• Mass production should be implement and on continuous
basis to produce more product.
• Improvement must be done from time to time to eliminate
waste of process, waste of time and waste of cost to add
value to final product.

12. Primary activities
3. Outbound logistic
• By creating a warehouse in production area, Sony can
increase production and place extra amount of finished
good to be delivered to customer.
3. Marketing & Sales
• Increase sales by delivering and sharing corporate value
• Using attractive and utilize new information technology to
increase popularity and increase sales.
• Make a difference and do Customer focus by targeting
lower middle income to high income customer.
• Improve and be excellence in rebranding and
management

13. Primary activities
4. After Sales Services
• Warrantees and guarantees should be attend in fast and
efficient manners
• Sony should have a repair center and authorized
distributors for service.
• By setting up online help and call centers, Sony can help
increase customer trust in purchasing Sony products
because they knew that Sony will provide excellent after
sales service.

14. Primary activities
Support Activities
1. Procurement
• According to Sony.net May 2003, Sony management policies is
concerning dealing with supplier categorize under headings of
“Fair Procurement”. This policies are heading for equal chance of
business to suppliers. Also to increase good relationship amongst
suppliers.
• Sony strictly meet expectation of customer by adheres to laws,
regulations and standards from countries that they are making
business with. By meeting the expectation it gives advantages on
dealing authorities while gaining trust from suppliers as a
reputable company.
• Sony should improves on zero defect from the planning to
ensure parts provide by suppliers is easy progress of supply
parts.
2.Technological Development
• With the founders' doctrine of "Do what has never been done before" and "Always stay one step ahead“, this
means Sony needed use new technologies in order to support value chain activities. With the help of jig or
custom-made tool used to control the location and/or motion of another tool will help to increase productivity
and support to delivering product to customer.

15. Porter’s Value Chain
Support Activities (Continues)
3. Human resource management
• Sony could start by being the most likable company to work
with, by creating happy, safe and positive environment to
work with while reducing high turn over.
• Training program should be improved, to make a skill workers
and are ready mentally and physically for their responsibilities
in the company.
• Attraction benefits, career and advancement opportunities
keeps employee stays thus reduce the turn over or to transfer
knowledge to new employee.
4. Firm Infrastructure
• Legal should follow compliance and regulations of the country
or state to ensure the products is safe and follow standards it
ease the process of delivering product to the customer.
• Quality management to be installed to ensure quality and
safety of product, employee and customer. Thus to increase
customer interest in Sony product.

16. References
• http://www.sony.net/SonyInfo/CorporateInfo/
• http://www.sony.net/SonyInfo/csr/SonyEnvironment/ourvision/
• http://www.sony.com.my/article/239931/section/overview
• http://www.rankingthebrands.com/Brand-detail.aspx?brandID=127
• http://www.sony-asia.com/microsite/eco/?referer=http%253A%252F%252Fwww.sony.com.my%252Fproductcategory%252Ftelevision-projector
• http://www.sony.net/SonyInfo/csr_report/sourcing/supplychain/
• http://www.ukessays.com/essays/business-strategy/the-greatest-insight-into-that-sony-strategy.php
• http://www.ask.com/wiki/Porter_five_forces_analysis?o=2802&qsrc=999&ad=doubleDown&an=apn&ap=ask.com
• http://www.ask.com/wiki/Value_chain?o=2802&qsrc=999&ad=doubleDown&an=apn&ap=ask.com
• http://economics-files.pomona.edu/jlikens/SeniorSeminars/Likens2012/reports/Sony.pdf
• http://university-essays.tripod.com/porters_5_forces_analysis.html
• http://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companies