Case 5: Sony Shockwave

In Search
of the
Next Hit
Product
 Questions
1. Discuss the importance of product innovation to the
future success of Sony in regard to the changing
marketing environment
environment.
2. Conduct a SWOT analysis on Sony.
3. What are the strategic options available to Sony, in
the wake of “Sonyy Shock”? Furthermore,,
recommend a course of action for Sony.
Q1. Importance of Product Innovation to
Sony’s
Sony s Future Success

Product innovation enables Sony to:

• Retain its brand status
• Benefit from innovative products – higher prices
• Add to the brand’s reputation as innovative products
are seen as technologically superior
• Maintain dominant industry position
• Reduce the risk of technological leapfrog
• Set proprietary standards
 Q1. Continued…Product
Innovation:

• Creates demand
• Acts as a barrier to entry for potential new entrants
• Helps create new markets
• Helps reposition a business
• Helps in defending market
ma ket share
sha e
Q2. SWOT Analysis:
y Strengths
g
• Global Size and Market Share
• Presence in numerous markets
• Solid brand image
• Creates market-defining products
• Experience and strength of brand
• Level of vertical integration
• Strength of “Playstation” Brand
• Japanese Strength in Electronic Engineering Design
• Alli
Alliances with
ith other
th manufacturers
f t
• Exposure to global markets
• N
New lleadership
d hi
Q2. Continued... SWOT Analysis:
Weaknesses

• Overcapacity
• Too broad a product range
• Low profit margins
• Collapse of Cathode
Cathode-Ray
Ray Television market
• Bureaucratic culture
• Sony’s
y development
p of new technology
gy - too slow
• Failing to focus on its core operations
• Slow to market products
• Over reliance on ‘Playstation’
Q2. Continued...SWOT Analysis:
Opportunities
• Expansion of global presence
• Taking advantage of producing in low cost
economies
• New technology which could become industry
standard, encourage upgrading to newer versions
and leading to new product opportunities
• Model count reduction and investment in
manufacturing capabilities to improve efficiencies.
• Sony
S di
divesting
ti non-strategic
t t i assets t
• Utilise electronic platforms to distribute products
• Further integration of business
• Creating interoperability
• Develop crossover products
Q2. Continued... SWOT Analysis:
Threats
• Increased foreigng competition
p
• Increased commoditisation of products
• Technologically leapfrogged
• Changing technology altering the competitive
landscape
• B d
Boardroom clashes
l h with ith partners
t such
h as BMG and
d
Ericsson
• Heavily reliant on Japanese market
• Reliant on fickle entertainment industry
• Changing consumer behaviour in terms of
downloading versus using storage discs
• Failure to successfully implement turnaround
strategy
t t
 Q3. Strategic
g Options:
p
• New management team
• Move production to low cost economies
• Renew and revitalise advertising campaign and focus
on brand image
• Continue aggressive price promotions
• Continue to reduce inventory levels
• Introduce innovative products
• Greater investment in R&D
• Exit personal computing market
• Improve distribution
d b networkk
• Rethink product portfolio
• Consider
C id partnerships
t hi and d reorganization
i ti