Swot analysis of Sony. Sony Group Corporation is a conglomerate Japanese multinational company. Masaru Ibuka and Akio Morita were the founders of Sony, and the foundation of the company on May 07, 1946, under the name of Tokyo Tsushkin Kogyo Ltd. The headquarter of the company is in Sony City, Minato, Tokyo, Japan.
Sony’s main products and services are; Financial Services, Gaming, Music, Movies, Electronic Components, Home Appliances, Cameras, Personal Computers, Smartphones, Televisions, Robots, telecommunications Equipment, Semiconductors, and Consumer Electronics.
According to an estimate, the annual revenue of Sony in 2020 was 80 billion dollars. Out of which, the net income of the company was 5,356 million dollars. However, the company has employed 111,700 employees to manage its worldwide operations.
Today, we’ll discuss the swot analysis of Sony. It’s going to analyze the internal and external factors impacting the world’s leading Japanese conglomerate company. Here’s the swot analysis of Sony as follows;
Strengths of Sony
Sony has a worldwide large database of loyal customers. Most of them are PlayStation gamers, and they would never think of substituting Sony with any other brand. It’s a great asset to the company.
Creativity & Innovation
Sony’s innovation and creativity through its diverse product range are unquestionable. The company has proven it over the years. Whether it’s crystal LED TV, compact disk, walkman, VCR, Blue-Ray Disk, or Trinitron color TV, the company’s contributions in the consumer electronics and home appliances industry are remarkable. They have revolutionized our lifestyle.
According to an estimate by Interbrand, the brand value of Sony in 2020 was 12,010 million dollars, and it has increased 14%. The company ranked at the 51st position of the Best Global Brands 2020. However, the market capitalization of the company in 2020 was 78.7 billion dollars according to Forbes. It ranked at the 47th position of the World’s Most Valuable Brand in 2020.
Sony’s focus has always been clear, and that is to produce quality products and satisfy the needs of customers. In fact, the company spends billions of dollars on the research and development of its products. According to an estimate, the R&D budget of the company in 2019 was 4.59 billion dollars.
Sony offers a wide variety of products and services to customers ranging from entertainment, cameras, mobile phones, and home appliances. The brand targets various customers with a variety of products. The diverse product portfolio helps to expand the company’s profitability.
Sony is one of the world’s top companies and the brand is operating its business globally. It’s not easy to become a multinational brand and compete in the international market. The company expanded and entered the US and the European market in the 60s and 70s and became a global player.
Weaknesses of Sony
Sony’s marketing strategies are very limited and poor compared to its competitors’ brands like Samsung, Apple, and Xbox. In fact, the company follows no promotional campaigns and it’s the biggest weakness. It’s because home appliances and consumer electronic products require a lot of marketing and promotion to encourage people to buy your products.
Sony usually sells its products at premium prices. Price does matter to many customers especially during the period of global economic recession. They start avoiding the brand and look for a substitute when it’s too pricy.
The hackers infiltrated Sony’s database in 2014 and got their hands on a lot of the company’s trade secrets. The company has been having strained relations with its competitors since then. It was a great loss for the company.
Reliance on Electronics
A major portion of Sony’s profit comes from the consumer electronics products like smartphone image sensors, cameras, TVs, and other items. When the demand for electronic products dropped during the pandemic year in 2020, it significantly dropped the company’s revenue. The over-dependence of the company on consumer electronics is very risky to the business.
Opportunities available to Sony
Sony should utilize its resources to buy new startup companies. It would help the company to expand its market and product portfolio. However, it would be less risky than only relying on consumer electronics products. It could buy a software house or a tech company.
PlayStation is a major selling product of Sony, but it doesn’t offer variety and diversification. The company should consider diversifying its top products. It would expand the company’s portfolio. For instance, the demand for games has been increasing; the brand should consider it launching more mobile/android games.
Medical imaging technology is a growing industry. It would grow approximately 4.5% more by the end of 2025. Since Sony is already running its business in the same industry. Therefore, the conglomerate brand should exploit this opportunity and work on the development of medical technology.
According to a report by IMF (International Monetary Fund), the growth rate of developing countries is 4.7% and the developed countries have a growth rate of 2.1%. It presents a great opportunity for Sony to exploit the growth of developing countries and expand its market there.
Threats Sony has to face
As we know that fake products are a major issue to the top brands in third world countries. The manufacturers of fake products usually target the premium price brands and push the counter products into the market and dismantle the parent brand’s reputation.
Sony also operates its business in the entertainment and gaming industry. Hacking and copyrights are a common and severe problem in both industries. Any lawsuit could cost the company millions of dollars. It would jeopardize the company’s credibility and financial loss.
The pandemic of covid-19 and worldwide lockdown and shutdown decreased the company’s profitability by approximately 30%. It would continue to decline in the upcoming years because of the post-pandemic economic recession.
Southeast Asian consumer markets are oversaturated by enough supply of Sony’s smartphones. The company had no choice but to leave the market when the competitive brands took over the market. It reduced the company’s growth and profitability to a great extent.
We’re living in the era of technological revolution, where companies are competing with each other with the development in technology. Every new tech development outdates the previous technology. A new brand enters the market and offers the latest technology at a lower price. They attract the price-conscious customers market.
Nintendo’s games and LG’s TVs are some of the main competitors of Sony. The brand is facing very tough competition in the Asian markets like India, Bangladesh, Pakistan, and other countries, where its product’s sale is declining.
Conclusion: Sony Swot Analysis
After a careful study of the swot analysis of Sony, we’ve concluded that Sony is indeed the world’s leading conglomerate Japanese company. The increasing competition, tech advancement, economic recession, lawsuits, hacking, and fake products are some of the main challenges. Sony should expand its portfolio by diversification and strengthening its security system.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.