Guided by Pro. Dr.Sanjay Bhayani.

An Industrial Analysis Report of

Sony Enterprise

Consumer durables are a category of consumer products that do not have to be purchased frequently because they are made to last for an extended period of time (typically more than three years). They are also called durable goods or durables.

Consumer goods are often divided into two categories: durables and non-durables. Durables have an extended product life. Since they're made to last.

Examples of nondurable goods include fast moving consumer goods such as cosmetics and cleaning products, food, fuel, beer, cigarettes, medication, office supplies, clothing and footwear etc.

While durable goods can usually be rented as well as bought, nondurable goods generally are not rented. While buying durable goods comes under the category of Investment demand of Goods, buying Non-Durables comes under the category of Consumption demand of Goods.

Introduction

Brands in India

Sony Corporation Company Background

Native Name ソニー株式会社 (Sony Corporation)

Type Public

Traded as TYO: 6758 NYSE: SNE

Industry Conglomerate

Founded 7 May 1946(as Tokyo Tsushin Kogyo)

1955(as Sony)

Founders Masaru Ibuka Akio Morita

Head Quarters Minato, Tokyo, Japan

Area Served World wide

Key People Osamu Nagayama (Chairman of the Board) Kazuo Hirai (President & CEO)

Products Consumer electronics Semiconductors Video games Media/Entertainment Computer hardware Telecom equipment

Services Financial services, insurance, banking, credit finance and advertising agency

Sony found its beginning in the wake of World War II. In 1946, Masaru Ibuka started an electronics shop in a bomb-damaged department store building in Tokyo. The company had $530 in capital and a total of eight employees.

The next year, he was joined by his colleague, Akio Morita, and they founded a company called Tokyo Tsushin Kogyo(Tokyo Telecommunications Engineering Corporation). The company built Japan's first tape recorder, called the Type-G. In 1955 the company name was changed to Sony.

In the early 1950s, Ibuka traveled in the United States and heard about Bell Labs' invention of the transistor. He convinced Bell to license the transistor technology to his Japanese company, for use in communications. Ibuka's company made the first commercially successful transistor radios. According to Schiffer, Sony's TR-63 radio "cracked open the U.S. market and launched the new industry of consumer microelectronics."

History

The company name of sony was created by combining two words of “sonus” and “sony”. The word “sonus” in Latin represents word like sound and sonic. The other word “sony” means little son Used in Combination, sony is supposed to represents a very small group of young people who have the energy and passion toward unlimited creation and innovative ideas.

Sony co-founder Akio Morita founded Sony Corporation of America in 1960.

Moreover, Sony played a major role in the development of Japan as a powerful exporter during the 1960s, 70s, and 80s.

Sony introduced a slogan known as "make.believe" in 2009.

Sony today158,500 employees

Wide product range Strong brand image

64 billion $ annual sales

When the company was founded in 1946, Mr. Ibuka created the Founding Prospectus, a document outlining the mission and values that he wanted his company to adopt. The first section was the “Purpose of Incorporation”, which was broken down into the following eight points:

a) To establish of an ideal factory that stresses a spirit of freedom and open-mindedness, and where engineers with sincere motivation can exercise their technological skills to the highest level;

b) To reconstruct Japan and to elevate the nation's culture through dynamic technological and manufacturing activities;

c) To promptly apply highly advanced technologies which were developed in various sectors during the war to common households;

d) To rapidly commercialize superior technological findings in universities and research institutions that are worthy of application in common households

Vision, Mission and Values

e) To bring radio communications and similar devices into common households and to promote the use of home electric appliances;

f) To actively participate in the reconstruction of war-damaged communications network by providing needed technology;

g) To produce high-quality radios and to provide radio services that are appropriate for the coming new era;

h) To promote the education of science among the general public.

Product

Range

TV & Audio Equipment

Financial Services

Computer Game Consoles

Movie & Video Equipment

Mobile Phones & Music

Financial Data of Sony Corporation FY12

Strengthening core businesses (Digital Imaging, Game, Mobile)

Turning around the television business

Expanding business in emerging markets

Creating new businesses and accelerating innovation

Realigning the business portfolio and optimizing resources

Strategy of Sony Corporation

Defining business objectives

Building a new management structure

Accelerating decision-making and execution

Management strategies for revitalising the Electronic

Business

Shares of consumer durables market in India(FY12)

Rural35%

Urban65%

Urban markets account for the major share (65 per cent) of total revenues in the consumer durables sector in India .

Demand in urban markets is likely to increase for non-essential products such as LED TVs, laptops, split ACs and, beauty and wellness products

In rural markets, durables like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years

Revenue of consumer durables in India(USD Billion)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

2.9 3.2 3.5 3.8 4.24.7

5.26.3

7.3

CAGR:12.2%

Market share of different products of consumer durables Market

30%

18%

13%

5%

34%

TelevisionRefrigeratorAir-ConditionerWashing MachinesOthers

3%

20%

23%

20%

18%

16%

OthersSamsungLGWhirlpoolGodrejVideocon

Market share of Major Players in Refrigerator market

Market share of major players in mobile phone market

33%

19%11%

6%

6%

26%

SamsungMicromaxKarbonSonyNokiaOthers

Market share of major players in Television market

20%

20%

21%

13%

9%

17%

SamsungLGSonyVideoconPanasonicOthers

Market share of major players in Air-condition market

26%

21%

19%

10%

24%

LGSamsungVoltasHitachiOthers

Sales of Sony’s different products worldwide

Surveyed as Asia's most valued brand in 2011.

Synonymous with technological excellence and having rich heritage of technological expertise. For example Trinitron Colour television, VCR, and Walkman.

Company helped develop the magnetic recording tape, the compact disc, and the Blu-Ray disc, used today as a medium for high-definition video playback. Its latest innovation, a Crystal LED television, was well received at the Consumer Electronics Show in Las Vegas.

Out of all its products at present, Sony's success with the PlayStation is most noteworthy -- it has been successful since inception, and still sees tremendous consumer demand.

A strong foothold in the entertainment industry with Sony Music and Sony Pictures.

 

Strength

The high cost of media production, especially in its television business, has affected the company's pricing strategy. Its television business has lost an equivalent of $6.3 billion for eight years in a row. It's also losing market share to manufacturers, such as LG and Samsung.

While diversifying into too many business segments, the consumer electronics giant has shifted its focus from its core competency -- making great consumer-electronic products.

This has resulted in a distortion in Sony's brand. Apple, which is also in the consumer electronics space, has managed to focus on just a few products, build competency, and make them incredibly successful.

Weaknesses

The company can take advantage of its movie and music business along with its experience in the gaming space to deliver value-added content to support and integrate its product line. It has talked about doing this with a four-screen strategy, which looks like a good concept.

The company lately bought off its entire Sony Ericson joint venture. This should give Sony the opportunity to act independently and innovate in the booming smartphone and tablet market.

The company has the opportunity to enter the healthcare-imaging sector in a significant way through a possible acquisition of a 30% stake in Olympus.

Opportunities

Sony faces price competition from competitors such as Samsung and LG, who are gaining traction with lower-cost products such as televisions and mobile devices.

If rumours are to be believed, Apple can give a tough time to Sony by introducing its own version of the television, Apple TV.

Sony's online network faces threats from hackers. The company's PlayStation network was hacked, resulting in leakage of customer information, such as credit-card data

Threats

PORTER’S FIVE FORCES ANALYSIS OF SONY

Product Differentiation

Capital Requirements

Switching Costs

Technology, Know-how and Innovation

Government Policy

Threat of New Entrants (Low)

Barriers to EntryBarriers to Entry

Big global supply chain management

(Suppliers are not concentrated)

Suppliers are forced to cut their prices or go out of business

Direct negotiation with suppliers in order to encourage: Reliable supply Faster delivery Lower prices

Many OEMs start to produce their own components in-house

Bargaining Power of Suppliers (Low)

Suppliers exert power in the industry by:Suppliers exert power in the industry by:

* Threatening to raise* Threatening to raiseprices or to reduce qualityprices or to reduce quality

Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases

Products are fairly undifferentiated

Buyers face few switching costs

Online shopping has increased the bargaining power of buyers

Buyers are price sensitive and demand high quality

Bargaining Power of Buyers (Rather High)

Buyers compete with the supplying industry by:

Buyers compete with the supplying industry by:

* Bargaining down prices* Bargaining down prices

* Forcing higher quality* Forcing higher quality

There are few substitutes from other industries, if any.

Most of them seem to be obsolete or have one foot out of door.

For example:

Digital Camera in the place of Film Camera

Fax machines in place of overnight mail delivery

Threat of Substitute Products (Low)

Products with similar function limit the prices firms can charge

Products with similar function limit the prices firms can charge

BCG

Matrix

LED TVDVD

PlayerPlay

StationDigital Camera

Semi-Conductor

Music PlayerCRT TV

VAIO

Sony-Ericsson

CD Player

WalkMan