SONY How to repeat its Walkman success Technology and strategy SBS-EM 2010-2011

SONYHow to repeat its Walkman

success Technology and strategy

SBS-EM 2010-2011

Franquien AnaïsJehin MaximeXhauflair Gilles

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Table of content Introduction

Fit external position and internal capabilities Industry profitability What makes industry leaders What capabilities do these KSF imply? Appraise resources and competences Strategy implications

Strategic intent for the future PESTEL analysis Key drivers Scenario analysis Key success factors Vision Acquire, develop internally or incubate?

Conclusion

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Fit external position and internal capabilities

Industry profitability

Positive impact network externalities Innovation potentials still high Strong brands (premium price) Cheap labour cost

Negative impact Increasingly mature market market saturation less product differenciation intense competition (Korea, China) lower margins

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What makes industry leaders attractive design more innovative star products genuinely new products creating new market segments low cost production

Taiwan, Korea, China

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What capabilities do these KSF imply?

Visionary leadership New product development and R&D Components manufacturing and

assembling Brand strength and marketing Bargaining power with dealers

(Apple selective dealer strategy)

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Appraise resources and competences

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Appraise resources and competences

Strategy implications Strengths:

Good at what they do engineering excellence

Good R&D Quality of equipment

Weaknesses: High manufacturing cost Divisional structure: lack of

communication and cooperation between the business units

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No trend-setting new gadget

Lot of competences and resources Invests billions of dollars/year Since 2000, no trend-setting new gadget In the past, mix of visionary leadership

and strategic planning Now, systemised procedures in Japan Missed some opportunities…

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PESTEL analysis Political

Regulations towards eco-friendly factories and producing recyclable products

Pressure for a company that pays decent salaries throughout the whole value chain and even to suppliers

Regulations on international trade: Chinese issues, closed markets

Compulsory warranties to counter programmed obsolescence

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Economical Appreciation of local currency (yen) Global economic downturn and saturation in

mature market BRICs opportunities Austerity measures in Europe Alliances between electronic companies Pressure for low cost manufacturing

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PESTEL analysis

Social Ageing population (demand for commodity

devices – robots) People always looking for more innovative

products Technology increasingly widespread and

affordable People looking for easier and more convenient

access to entertainment Children using technological product very early

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PESTEL analysis

Technological Technology evolves faster than customer

requirements Dematerialisation of technology Link with medical innovations embodied in technology Bioelectronics Connectivity possibilities increased All-in-one products Flexible electronics that can be bent Technological obsolescence 3D dominance

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PESTEL analysis

Environmental Emphasis on sustainability by customers Natural catastrophes questioning the whole

supply chain model Increased use of recyclable materials in

electronics Global warming – solar panel integration in

products

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PESTEL analysis

Legal Employment laws: Increasing the minimum

wage Competition laws against monopolies Health and safety: more employee

protection

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PESTEL analysis

Key drivers1. Ageing population 2. BRIC demand for consumer

electronics depending on disposable income

3. Competition from Chinese giant climbing the learning curve

4. 3D emergence for all devices5. Strategic alliances to build a

supergiant in electronics

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Scenario analysis‘My Best Friend's Wedding’‘Jackpot coming from the grave’

‘Chinese war’‘3D everywhere’

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My best friend’s wedding

1. People getting older and older, still not used to using technology

2. BRIC increasingly wealthy, demand for consumer electronics increases

3. Tough competition but for basic electronics4. 3D received a cold welcome form customers5. Strong mergers between competitors

to counter Sony supremacy

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Jackpot coming from the grave 1. People getting older and older, asking for

devices that make their daily life easier (robotics and domotics). Accelerates collaboration between medical devices and electronics firms

2. BRIC domestic’s customers still don’t need electronics devices with advanced features that don’t matter to them.

3. Tough competition but for basic electronics4. 3D well-accepted but Sony faced hard competition on

this market as well5. No significant M&A in the industry

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Chinese war1. Ageing population doesn’t have a strong

impact on consumer electronics2. BRIC increasingly wealthy, demand for

consumer electronics increases3. Chinese companies have improved very

fast and have a huge market share thanks to their cost efficiency

4. 3D received a cold welcome form customers5. Intranational M&A to counter Chinese

competition

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The future in 3D 1. Ageing population doesn’t have a strong

impact on consumer electronics2. BRIC economies stagnate, don’t change

the rules of the game 3. Increased competition from China 4. 3D is now the standard in all devices 5. No significant M&A in the industry

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Strategic customersDecision-making power is shifting

From:

Private Customer

To:

movie and television industry (3D becoming a huge market)

Government (robotics replacing nurses for the old subsidized by governments)

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Key success factors Past ksf? 

strong R&D capabilities coming up with new products and technologies

ability to make its own technology the standard worldwide Respond to customers’ needs

Past market leaders?

Brands coming up with new products and winning standard wars

New technologies for the consumer through innovation and miniaturization

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Future ksf?

ability to come up with easy-to-use products connected with all the other products of the brand, maximizing the platform externalities

connectivity of products to the internet low-cost manufacturing but importance of design

Future market leaders

most user-friendly brands brands able to connect their customers through all their devices importance of brand image able to convince trendy customers

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Key success factors

Vision Our vision for the future, focus on:

High quality but user-friendly products Connectivity between different products Robotics 3D (video and gaming) Strengthen communication between the

different departments

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Vision Sony’s strategic intent (Sir Howard Stringer):

"To be the leading global provider of networked consumer electronics and entertainment”

Develop the next generation of TV display Commence the era of 3D gaming Become the undisputed leader in 3D Develop networked mobile products to utilize network

services Increase speed to market Deliver new entertainment experiences Increase value and desirability of Sony products

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Strategy for the future External environment subject to rapid growth

Internal resources and competences Provide a more secure basis for strategy

Going solo because sufficient and diversified assets and competences internal growth

Alliance: need of open platforms and softwares

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Improve strategic agility Strategic sensitivity:

Missed the trend to all-in-one products, connectivity

Leadership unity: Already improved with new CEO Howard

Stringer Resource fluidity:

Lack of coordination between the different business units competing for resources

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Thank you for your attention

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