G. H.

PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

BRIEF ANALYSIS OF

“SONY CAMERA”

Subject: Business Policy and Strategic Management

Submitted to: Dr. K. S. Prasad

Submitted By: Priyanka Sevra

(17M71)
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

1. Introduction about product/ organization with relevance to value

chain analysis

Unlike most digital camera manufacturers, Sony was not a major player in the film camera
market before beginning to make Sony cameras in digital form. Sony cameras include the
company's Cyber-Shot line of digital cameras and mirror less ILCs, which have become very
popular.

Today's Sony Offerings

Sony customers will find Cyber-Shot digital cameras aimed at beginner, intermediate, and
advanced users.

DSLR
Advanced DSLR (single-lens reflex) digital cameras from Sony will work best for
intermediate photographers and advanced beginners, with interchangeable lenses available.
However, Sony does not make a lot of DSLRs anymore, preferring to focus its attention on
mirror less interchangeable lens cameras.

Mirror less

Sony offers mirror less interchangeable lens cameras, such as the Sony NEX-5T, which use
interchangeable lens cameras like a DSLR, but which do not have a mirror mechanism inside
the camera to allow for use of an optical viewfinder, which allows the mirror less models to
be smaller and thinner than a DSLR. Such cameras provide good image quality and plenty of
advanced features, although they're not considered quite as advanced as a DSLR camera.

Advanced Fixed Lens

Sony also has turned much of its attention to the advanced fixed lens portion of the market,
where fixed lens cameras are constructed with large image sensors, allowing them to be very
successful in creating high-quality images. Such models may especially appeal to a DSLR
camera owner, who also would like a secondary camera that can still create great looking
images while being quite a bit smaller. Such advanced fixed lens cameras are very expensive
-- sometimes more expensive than an entry-level DSLR camera for beginners -- but they still
have some appeal, especially for portrait photographers.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

2. Draw a PESTEL model along-with SWOT analysis.

 PESTEL ANALYSIS

Sony is a maker of consumer electronics, cameras, game and network services, movies and
music as well as a provider of financial services. The Tokyo based conglomerate owns a
diversified business portfolio and is considered to be a leading brand in the industry. Apart
from that the brand is the fifth largest manufacturer of televisions as of 2016. SONY is a
market leader and one to bring several super hit products first to the market including the
famous walkman. The brand has discontinued its VAIO laptop series after having run into
losses in its PC division for several continuous years. However, its financial strength is not
affected and the brand is doing well based on its brand image and heavy focus on innovative
technology.

This is a PESTEL analysis of how the brand is affected by these forces which can be
political, economic, social, technological or even legal and environmental. This analysis will
so how SONY’s business is influenced by these forces and how it stands to gain or lose due
to such pressures in the global market.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Political:

Political factors can have a major and deep impact on the business of any global
brand. The political environment is not the same all over the globe and there is a deep
relationship between the political environment and economic environment of a region.
Political stability can also be an indicator of economic stability and if a country is politically
stable, it enjoys higher growth maintains a business friendly environment. Political instability
can give rise to insecurity for businesses. Particularly, in countries like China, where a large
part of SONY’s supply chain is located, any kind of political or military disruption can result
in business disruption for SONY and then financial losses. Such disruptions can disrupt
SONY’s or its business partner’s operations. In several regions, the chances of geopolitical
conflicts, terrorist attacks or political discord are always higher. This can also have an
adverse effect on SONY’s operating results and financial income. In this way, political
factors can have both direct and indirect effects on SONY’s business and income.

Economic:

Economic factors always have a direct and deep impact on the businesses and
particularly those which are spread globally. Economic recession has not been long past. It
was a period of low economic activity when millions of jobs were lost and the level of
unemployment was high. The situation has changed and the condition of employment has
grown a lot better since then. With rising employment, consumer confidence has returned and
the level of spending has gone up. People are now more confident and spending on luxury
items. With the level of disposable income having grown higher, the situation is favourable
for brands like SONY. The world economy is performing better. However, the situation is not
alike everywhere and some economies are still seeing fluctuations. Russia is an example.
China, India and Brazil have grown into hot markets where most of the battle is going on in
the 21st century. Last year saw fluctuations in the Chinese stock market but the situation grew
more stable this year. Better economic situations are always good for global businesses.
Rising economic activity leads to higher sales and better profits. In this way, you can see the
relationship between economic factors and the business and profitability of SONY.
Social:

Socio-cultural factors also have an important meaning in the context of international

business. Changes happening at the socio-cultural level can reduce the demand for some
products and services and increase it for the others. As happened in the case of social media,
with its arrival several things changed. As the wave of globalization swept by, thousands of
societies and cultures were brought together and several new combinations were born. If
social trends change they bring bigger changes with themselves. Socio-cultural forces affect
how people choose and buy. Consumer buying decisions bear an important influence of
socio-cultural factors. This also affects how brands market themselves. SONY makes a large
expenditure on its marketing efforts. From market to market and region to region it has
crafted different strategies which suit the local cultures and tastes.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Technological:
Technological changes are happening faster in the 21st century and they are bringing
bigger changes. New technologies arrive and make the old ones obsolete. SONY has made its
competitive position stronger by investing in R&D and production capacity. Companies are
investing in technology to strike a deeper connection with the customers and to reach a larger
customer base. Whether in terms of marketing, sales or customer service, the need for
investing in better technology has grown and this has affected the level of competition among
the businesses. Technological factors have other kinds of effects on businesses and their
competition too. In fact data and technology are playing a more important role now in the
context of business. Brands are collecting data to convert it into actionable information and
using data to make real time decisions and for real time actions. Reliable data can be highly
beneficial if a business wants to grow its customer base and to attract and retain customers. In
terms of marketing too digital technology and social media are more effective than the
traditional means. Brands that are investing in technology to provide personalized service
are winning. SONY’s business is most of it about technology. From televisions to camcorders
and play stations, it continues to invest in quality and technological innovation to remain
ahead of competition.

Environmental:
Sustainability is now an important priority for big businesses in the 21st century. It is
not just about reducing your carbon footprint but protecting the environment for the
betterment of the community. Companies that have very low or no carbon footprint are also
investing in sustainability and environment. A brand whether big or small can minimize its
carbon footprint and work to protect the environment. SONY has planned for zero carbon
footprints, and is now investing in further minimizing its impact n the environment.
According to SONY’s website, “Sony has continued to promote environmental activities
based on our “Road to Zero” environmental plan, which aims for a zero environmental
footprint. In order to accelerate our environmental activities, we have now established our
“Green Management 2020” environmental targets (achievement year: FY2020). As we move
toward these targets, the entire Group, including the field of entertainment in addition to
electronics, will make the best use of its individual strengths in performing these activities”
(Sony, sustainable development). SONY has made some appreciable progress in this
direction and is now working on the next stage of its plan for a healthier and happier – a
greener planet.

Legal:
The role of law in the context of business is well known. There are several laws
including labour related regulations, environmental regulations and taxes that the businesses
are required to abide with. The situation can be especially difficult for the companies
operating internationally. The legal structure differs from country to country and market to
market. The international brands are required to operate and abide to all these laws in
whichever country they are operating. Laws and legal hassles can also increase operational
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

costs. In case a brand is caught in a legal tussle, it may end up coughing up millions and
losing quite a major sum. Law can become a major pain in such a case. Companies try their
best to avoid legal hassles ad still problems can arise. In some countries taking necessary
regulatory approvals can take months which can be a difficult situation for any business.
Local legal and regulatory restrictions including labour regulations and labour union
agreements can also make the situation difficult for big businesses like SONY. In this way,
law and legal factors can also have a major impact on businesses and their profitability.

 SWOT Analysis
STRENGTHS
1. Sony is one of the biggest brands in the world
2. Sony is known as a pioneer in its field with offerings ranging from electronics, music,
computing, gaming, semiconductors etc.
3. It has more than 120000 employees across the world
4. Sony has a legacy of more than 70 years and the brand is still going strong
5. Sony has excellent brand image and is known across multiple geographies.
6. Sony has also ventured in Play station Gaming which is competing directly with Microsoft
Xbox gaming
7. Sony has been instrumental in inventing new technologies and starting new categories in
the market

WEAKNESSES
1. Sony is perceived to be great brand but also expensive in many of its markets
2. Sony is no longer a market leader in most of the categories it competes in because of the
competition it has to face.

OPPORTUNITIES
1. Sony has lot to gain still in the mobile ecosystem as compared to companies like Samsung,
Apple and LG
2. Play station Gaming is one area which can be increased further and can be targeted to
common people, currently only young generation and gaming enthusiasts are the biggest
target group

THREATS
1. Competition is very stiff in the electronics and mobile segment
2. External factors like taxes and changes in law in various geographies
3. Counterfeit goods which compete directly with premium brand like Sony
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

3. Explain the industry’s dominant economic traits.

 Market Size :

Sony has officially surpassed Canon to lead the full-frame camera market in the
United States. The company claims to have taken a lead “in both dollars and units”
sold. But it likely won’t have too much time to rest on its laurels, given that Nikon is
expected to be looking to muscle in on Sony’s full-frame mirror less cameras next
week.

Additionally, as DP Review points out, those numbers are probably a little unfairly
skewed toward Sony, given that Canon (the old, long time leader) hasn’t actually
released a full-frame interchangeable lens camera in over a year. And Nikon, which
Sony passed in April 2017, hasn’t released a major device since the D850 in August
2017 either (and stock can be hard to come by), while Sony has been able to ride the
sales of more recent releases.

Still, it’s an impressive result for Sony, which has steadily been increasing market
share for interchangeable cameras for some time. And it sets the stakes even higher
for Nikon, given that Sony (according to its own reports) has lead the mirror less
market for the past six years — meaning that Nikon will certainly have an uphill
battle to face with its new cameras.

 Scope of Competitive Rivalry:

High concentration ratio: with the largest profits owned by the ‘Big 3’ Canon, Nikon
and Sony – Other competitors Pentax, Olympus, Kodak, Samsung, Panasonic, Casio

The digital camera market is a mature market and highly saturated with slow growth.
High exit barriers – The industry is highly capital intensive, with automated
machinery which are specially designed to build camera.

Product differentiation are based on the strength of the brand – due to high
competition competitors counter-react to the activity of another firm; for example
Sony’s development of digital bridge camera has caused Nikon, Canon and Olympus
to introduce their own bridge cameras. Competition is intensified in the form of
advertising, and brand exposure to build brand equity. All incumbent firms drive for
product development and quality.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

 Stage in Life Cycle:

INTRODUCTION STAGE

Camera Obscura: Aristole expressed ideology of optics

- 16th century: Improvement of brightness and clarity enlarging the hole inserting
a telescope lens.
- 19th century: Joseph Niepce , heliography or sun drawing
GROWTH STAGE
From 1844-1992
- Panorama
- Polaroid
- Disposable
- Under water
- Digital
- Professional Editing-digital

MATURITY STAGE
2000-2014
- Camera phone
- Camera

DECLINE STAGE
2004
Kodak steps production of film camera

PRODUCT PLAN
- Internal digital lenses
- Touch to learn aperture and exposure setting
- On-the spot editing
- Pie-safe
- WIFI connectivity
- Make it wearable
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

 Technology/Innovation:
Sony camera has historically been notable for creating its own in-house standards for
new recording and storage technologies, instead of adopting those of other
manufacturers and standards bodies. Sony (either alone or with partners) has
introduced several of the most popular recording formats, including the floppy
disk, Compact Disc and Blu-ray Disc.

Video recording

The company launched the Betamax videocassette recording format in 1975.[40] Sony was
involved in the videotape format war of the early 1980s, when they were marketing
the Betamax system for video cassette recorders against the VHS format developed
by JVC.[41] In the end, VHS gained critical mass in the marketbase and became the
worldwide standard for consumer VCRs.
Betamax is, for all practical purposes, an obsolete format. Sony's professional-
oriented component video format called Betacam, which was derived from Betamax, was
used until 2016 when Sony announced it was stopping production of all remaining 1/2-inch
video tape recorders and players, including the Digital Betacam format
In 1985, Sony launched their Handycam products and the Video8 format.[43] Video8 and the
follow-on hi-band Hi8 format became popular in the consumer camcorder market. In 1987
Sony launched the 4 mm DAT or Digital Audio Tape as a new digital audio tape standard.
Audio recording

In 1979, the Walkman brand was introduced, in the form of the world's first portable music
player using the compact cassette format.[45] Sony introduced the MiniDisc format in 1992 as
an alternative to Philips DCC or Digital Compact Cassette and as a successor to the compact
cassette.[46] Since the introduction of MiniDisc, Sony has attempted to promote its own audio
compression technologies under the ATRACbrand, against the more widely used MP3. Until
late 2004, Sony's Network Walkman line of digital portable music players did not support the
MP3 standard natively.
In 2004, Sony built upon the MiniDisc format by releasing Hi-MD. Hi-MD allows the
playback and recording of audio on newly introduced 1 GB Hi-MD discs in addition to
playback and recording on regular MiniDiscs. In addition to saving audio on the discs, Hi-
MD allows the storage of computer files such as documents, videos and photos.
Audio encoding
In 1993, Sony challenged the industry standard Dolby Digital 5.1 surround sound format with
a newer and more advanced proprietary motion picture digital audio format
called SDDS (Sony Dynamic Digital Sound). This format employed eight channels (7.1) of
audio opposed to just six used in Dolby Digital 5.1 at the time. Ultimately, SDDS has been
vastly overshadowed by the preferred DTS (Digital Theatre System) and Dolby Digital
standards in the motion picture industry. SDDS was solely developed for use in the theatre
circuit; Sony never intended to develop a home theatre version of SDDS.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Sony and Philips jointly developed the Sony-Philips digital interface format (S/PDIF) and the
high-fidelity audio system SACD. The latter became entrenched in a format war with DVD-
Audio. Neither gained a major foothold with the general public. CDs were preferred by
consumers because of the ubiquitous presence of CD drives in consumer devices until the
early 2000s when the iPod and streaming services became available.
Optical storage

In 1983, Sony followed their counterpart Philips to the compact disc (CD). In addition to
developing consumer-based recording media, after the launch of the CD Sony began
development of commercially based recording media. In 1986 they launched Write-
Once optical discs(WO) and in 1988 launched Magneto-optical discs which were around
125MB size for the specific use of archival data storage.In 1984, Sony launched
the Discman series which extended their Walkman brand to portable CD products.
In the early 1990s, two high-density optical storage standards were being developed: one was
the MultiMedia Compact Disc (MMCD), backed by Philips and Sony, and the other was the
Super Density disc (SD), supported by Toshiba and many others. Philips and Sony
abandoned their MMCD format and agreed upon Toshiba's SD format with only one
modification. The unified disc format was called DVD and was introduced in 1997.
Sony was one of the leading developers of the Blu-ray optical disc format, the newest
standard for disc-based content delivery. The first Blu-ray players became commercially
available in 2006. The format emerged as the standard for HD media over the competing
format, Toshiba's HD DVD, after a two-year-long high-definition optical disc format war.
Disk storage
In 1983, Sony introduced 90 mm micro diskettes (better known as 3.5-inch (89 mm) floppy
disks), which it had developed at a time when there were 4" floppy disks, and a lot of
variations from different companies, to replace the then on-going 5.25" floppy disks. Sony
had great success and the format became dominant. 3.5" floppy disks gradually became
obsolete as they were replaced by current media formats.
Flash memory
Sony launched in 1998, their Memory Stick format, flash memory cards for use in Sony lines
of digital cameras and portable music players. It has seen little support outside of Sony's own
products, with Secure Digital cards (SD) commanding considerably greater popularity. Sony
has made updates to the Memory Stick format with Memory Stick Duo and Memory Stick
Micro.

 Industry profitability:
Sony is one of Japan's largest corporations by revenue. It had revenues of ¥6.493
trillion in 2012. It also maintains large reserves of cash, with ¥895 billion on hand as
of 2012. In May 2012, Sony shares were valued at about $15 billion.
The company was immensely profitable throughout the 1990s and early 2000s, in part
because of the success of its new PlayStation line. The company encountered
financial difficulty in the mid- to late-2000s due to a number of factors: the global
financial crisis, increased competition for PlayStation, and the devastating Japanese
earthquake of 2011. The company faced three consecutive years of losses leading up
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

to 2011. While noting the negative effects of intervening circumstances such as

natural disasters and fluctuating currency exchange rates, the Financial
Times criticized the company for its "lack of resilience" and "inability to gauge the
economy." The newspaper voiced scepticism about Sony's revitalization efforts, given
a lack of tangible results.
In September 2000 Sony had a market capitalization of $100 billion; but by December
2011 it had plunged to $18 billion, reflecting falling prospects for Sony but also
reflecting grossly inflated share prices of the 'dot.com' years. Net worth, as measured
by stockholder equity, has steadily grown from $17.9 billion in March 2002 to
$35.6 billion through December 2011. Earnings yield (inverse of the price to earnings
ratio) has never been more than 5% and usually much less; thus Sony has always
traded in over-priced ranges with the exception of the 2009 market bottom.
On 9 December 2008, Sony Corporation announced that it would be cutting 8,000
jobs, dropping 8,000 contractors and reducing its global manufacturing sites by 10%
to save $1.1 billion per year.
In April 2012, Sony announced that it would reduce its workforce by 10,000 (6% of
its employee base) as part of CEO Hirai's effort to get the company back into the
black. This came after a loss of 520 billion yen (roughly US$6.36 billion) for fiscal
2012, the worst since the company was founded. Accumulation loss for the past four
years was 919.32 billion-yen. Sony planned to increase its marketing expenses by
30% in 2012. 1,000 of the jobs cut come from the company's mobile phone unit's
workforce. 700 jobs will be cut in the 2012–2013 fiscal year and the remaining 300 in
the following fiscal year.

4. What kind of competitive forces are the industry members facing?

Porter’s 5 forces is a model of pure competition which was developed to analyse the
competitive environment of an industry to a particular firm. Michael Porter provided this
framework which features an industry as being influenced by 5 forces:

 Industry competitors: intensity of rivalry

 Threats of new entrants
 Power of buyer
 Power of supplier
 Threat of substitutes
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

1. Industry competition: Intensity of rivalry

High concentration ratio: with the largest profits owned by the ‘Big 3’ Canon, Nikon and
Sony – Other competitors Pentax, Olympus, Kodak, Samsung, Panasonic, Casio

The digital camera market is a mature market and highly saturated with slow growth.

High exit barriers – The industry is highly capital intensive, with automated machinery which
are specially designed to build camera.

Rivalry is extremely intense and aggressive; the product development by Canon 450D is
matched by Nikon D90.

Product differentiation are based on the strength of the brand – due to high competition
competitors counter-react to the activity of another firm; for example Sony’s development of
digital bridge camera has caused Nikon, Canon and Olympus to introduce their own bridge
cameras. Competition is intensified in the form of advertising, and brand exposure to build
brand equity. All incumbent firms drive for product development and quality.

2. Threat of new entrants

Incumbent firm’s large economies of scale – Low threat of new entrants, as incumbent firms
are producing at the lowest-cost production.

Extremely high capital requirement – intangible and tangible capital requirement: Existing
firms are highly experienced and the industry is driven by knowledge and innovative
capacity. For example, manufacturer Canon has an extremely advanced quality assurance,
where no dust are prohibited to touch the production line of its lenses and mirror-house, as it
can affect the function and quality of a camera. The extensive investment in robotics is
expensive.

Buyers switching costs are high - (see B2C in bargaining power of buyers), switching costs
of buyers are high hence, and new entrants may possibly be ignored by consumers.

Expected price and product retaliation – if a new entrant was able to enter the market
successfully, with a competitive product; price retaliation may occur if consumers are
affected by the entrance, however incumbent firms may also ignore if customers are not
affected by the entry.

Even if incumbent firms are unlikely to be affected by entry of new firms, because of strong
consumer base, and the nature of consumers as brand and quality conscious. Consumers are
image quality driven, although all firms in the market are equally almost as attractive. The
long-established brand in their evoked set will not prepare them to take the risk with new
brands.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Due to the uncertainty of success in the market, new entrants are unlikely or at least
unpredictable.

3. Bargaining Power of Buyers

Buyers’ bargaining power is low, both for B2C and B2B:

B2C:

Competing products are perceived to be highly differentiated; they are based on brand
perceptions and highly dependent on consumers’ sophistication of the product, especially in
the DSLR market. Consumers are very concerned about quality, and are not willing to
bargain or trade price for quality. Consumers’ bargaining power is low.

Switching costs are high -- DSLR consumers are unlikely to switch to other brands due to
high investments in lenses, for example, a Canon user with a collection of Canon lenses will
unlikely convert or switch to another camera brand such as Nikon or Olympus. Therefore,
their bargaining power is low.

B2B:

Buyer power is relatively low - They must have a major global brand, such as Canon brand
on their shelves to attract consumers and to assure consumers’ of their own credibility with
availability of top brands. This is especially important for electronic and appliances retailers
or specialist shops (non-electronic retailers) which are increasingly being adversely affected
by online e-tailers selling cameras and accessories, as consumers are switching to online e-
tailiers. They need global brands to compete with their online counterparts. Canon is a strong
brand; hence Canon cameras are important to the buyers’ (both online and non-online
retailers) profitability (Euromonitor, 2011). Buyers’ bargaining power is low.

Canon is a big global brand and has the ability for forward integration. Buyers’ bargaining
power is low.

4. Bargaining Power of Suppliers

Canon’s suppliers have relatively weak power. Canon practices open and green procurement.
Which suppliers who wish to supply Canon will be required to send a proposal, but they must
be up to Canon’s "Global Canon Green Procurement Standards" and guide established in
1997 which is based on its corporate philosophy Kyosei which emphasises the importance of
the community and the environment. Canon takes its corporate social and environmental
responsibility very seriously. Suppliers play by Canon’s rules and up to Canon’s quality
standards. Canon has full in-house production of materials, including the manufacture of its
production line, tools and equipments.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

5. Threat of Substitutes
 Low threat of substitution
 Mobile phones and cameras with camera functions – They have the ability to meet the
basic need of capturing an image.
 Analogue or film SLR cameras

Competitors within the industry have the means to influence competitive forces, the industry
structure. Downes (2000) have argued that digitization have challenged Porter’s assumptions
of stable market

Digitization – the internet and advances in technology have given competitors in the industry
access to far more information. Hence, new business models are constantly emerging, in
which even players from outside the industry have changed the basis of competition in the
market.

Mobile phones and cameras (the communication industry) have started to integrate digital
camera functions into their products; it is competing and significantly affecting the digital
compact cameras (Euromonitor, 2011). They are not directly substitutable, because a camera
cannot fulfil the function of mobile phones. Hence the structure of competition is changing.
Nevertheless, Canon, Nikon or Fujifilm have no plans to build accessories for cameras (AFP,
2012). Those who base their thinking solely on the Five Forces Model will not see these
changes coming in time.

Organizations can choose their own environment. Although both Canon and Nikon also
compete in the compact digital camera market, their prime focus is on the development of
their digital SLR market, while Sony focuses on the development of their digital compact.
Digital compact camera market and DSLR markets have a completely different consumer
base. DSLR consumers place foremost importance on quality and the least on price, while
DCC are relatively price sensitive (Mintel, 2011). This makes Sony and Canon and indirect
competitors.

Value net -- Competition

Rather competitive advantages now emerge from the ability to develop lasting relationship
with costumers and to manage far-reaching networks of partnership for mutual advantage
(Recklies, nd). Technology is an important driver for change in the digital camera industry.

Alliance -- Kodak and Canon has formed an alliance to share technology in establishing
Kodak-Canon 500-series, Kodak Professional DCS 520; using Kodak’s digital back and
processing unit, with Canon EOS1 body and interchangeable lenses. The 500 series is also
sold by Canon as D5000 and D6000 model. Kodak’s 400-DSLR series was an alliance with
Nikon based on Nikon’s N90s body (Askey, 1999).
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Value-Net - Brandenburger and Nalebuff (1996) introduce the concept of value net, extended
the Five Forces Model adding ‘complementors’ to be a sixth force. Complementors refer to
organizations that sell products and services that enhance the value of another firm’s
products.

Hyper-competition

The industry is constantly developing, innovating and upgrading. Canon’s constant upgrading
and development of new products and hardware destabilises the digital camera industry,
forcing competitors to react. Rapid rate of technological change and competition is based on
ideas and innovation, and ability to execute it. Inability to compete or at least catch up with
the increasingly advanced DSLR features, Pentax has been sold off, while Samsung has left
the DSLR market for the same reason, as level of DSLR development has made Samsung’s
competitive advantage in DSLRs obsolete. In 2006, Konica Minolta had completely quit the
market because it was ‘too competitive’ and has sold its digital camera business to Sony.
Product lifecycles are shorter, especially in the digital camera market. The digital camera
market is indeed far than stable or static, as new markets are constantly emerging within the
industry.

Despite the changes in the industry dynamics and business models (instable, dynamic and
complex) – Porter’s model is not entirely obsolete. The underlying idea is that every business
operates in a framework of suppliers, buyers, competitors.

5. What factors are driving industry changes and what impacts will
they have?

Changes in who buys the product and how they use it:

The target market of the camera is young generation. There are two parts of the young
generation that are students and working class. Students want to have camera, there are about
80 percent students who own a camera at college in 2017, compared with 38 percent in 2009.
There are many reasons why people may like one brand of camera equipment versus another.
And if you ask a room full of photographers which camera manufacturer they like the best,
and why, you will often get a wide range of responses and opinions. The a6300 (now only
$900), gives you a very lightweight/portable body with the ability to shoot 4K video,
continuous autofocus for video, 11 frames per second when shooting 24MP still raw photos,
and a few other interesting features. Plus I was able to buy a very good lens mount
adapter for Sony E-Mount cameras (made by Metabones) which allows me to use the Sony
a6300 with all my existing Canon EF mount lenses as well.
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

Increasing globalization:

The demand of the camera is growing rapidly worldwide, because of quality becomes more
popular. More and more people start to buy a camera, because of the trend market. Sony
camera has replaced the normal camera. Sony positions its camera as the high quality and
high volume pictures.

Industry life cycle:

There are five stages of the industry life cycle: Introduction stage, Growth stage, Maturity
stage, decline stage and product plan. In the growth stage, the company produces more
products and increases the market share. In the introduction stage, some of competitors start
to see the opportunities in this market. In the maturity stage, the product price is stable and
more competition comes to market. In the decline stage, the sale of the product decreases
until the product innovation or discontinue in the market. Sony camera have reached the
growth stage like all other members.

Internal Analysis:

Value Chain- The value chain is that an organization creates value by performing a series of
activities and it represents how each competitive advantage created via an organization adds
value to the service or product for each customer. In the Sony camera, R&D, Production,
Marketing & Sales, Customers Service and Human Resource are adding the value to their
company.

Research and Development

Research and development activities can usually be separated into two main categories, they
are internal R&D and non-internal R&D. Internal research and development is basically any
R&D activities that are carried out or managed by the company itself. On the other hand,
non-internal research and development are R&D activities that aren’t operated by the
company itself, strategic alliances and collaboration with other companies is a good example.
Sony Corporation employs both internal and non-internal R&D activities which we will be
discussing shortly

According to the company’s fact book that was published in 2006 on its website, it stated
that the company’s R&D will be focusing on four main areas, they are:

1. Platforms for home and mobile electronics

2. Semiconductor technologies
3. Devices technologies and
4. Software technologies
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

To improve the platforms for home and mobile electronics, Sony focuses on developing
products that support the high definition content. In semiconductor technologies, Sony
focuses on developing electronic applications for Cell, which is a very powerful
microprocessor. In devices technologies, Sony is focusing on developing Blu-ray disc
technologies which is designed to enhance High Definition vision to the next level.
Finally for software technology, Sony focuses on developing software that helps
consumers to operate electronic products in a more user friendly way. Other software
focuses are codecs and Digital Rights Management (DRM) which is designed to protect
products such as music, video and eBooks.

Marketing and Sales:

In a recent presentation at its investor’s relations day in Tokyo, Sony was not shy about
its ambitions in the photography market. According to the presentation, Sony intends to
occupy the top slot in the overall camera market by the end of 2020 by boosting its
interchangeable lens systems to beat back Canon and Nikon.

According to figures shown at the event, Sony achieved a 20% share of the still camera
market in 2017 by value, and managed to rank third behind Canon and Nikon. It says it
was the number one brand in the mirror less market, and was number one in the premium
compact business.

Human Resources:

Human resource strategy is generally high. Human resources strategy will not solve the
problem of ownership of HR processes. The strategy defines the strategic role of human
resource initiatives in the organization and within a few years. Human resources is the
best tool for ownership of HR processes to be determined. It also helps identify gaps in
the organizational and human resources skills and competencies of HR. The model makes
the management of human resources to operate smoothly.

6. What are the key factors for competitive success?

Apart from the value chain and the technology, factors that play an important role in
gaining competitive success are:

 Extensive research and development

 Technology and innovative activities
 Global manufacturing and distribution network
 Diversified SBUs
 G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET

From the beginning Sony was determined not to produce discount products but rather
high-priced, high-quality items. The first transistor radio sold from $29.98 at a time
when television didn't cost much more and new cars sold for less than $1,000.
One reason that Sony found success in America first and made such a mark in the
global market is they were shut of Japanese markets by Matsushita, which dominate
the domestic Japanese electronics market and its distributors.
Sony took off in the 1970s and 1980s with the sales of sleek, modern-looking
televisions, Walkmans, compact disc players, VCRs and other popular electronic
devices. Sony as much as another company helped erase the notion that Japan made
inferior products.
Sony's research laboratories employed 1,000 engineers whose goal was to make
products people didn't know they needed. Morita once said, "Our plan is to lead the
public with new products rather than ask them what kind of products they want."
Among the things it came up was the CD which it invented with Phillips and launched
in 1982.
In 1961, Sony had 3,703 employees and $51.6 million in sales. In 1966, it had 6,061
employees and $130.4 million in sales. In 1971, Sony had grown to 10,003 employees
and $544.7 million in sales. By 1991, it was a global giant with 19,811 employees and
$27.96 billion in sales. In 1999, Sony had worldwide sales of $57 billion and a profit
of $1.2 billion.