SONY How to repeat its Walkman success Technology and strategy SBS-EM 2010-2011 Franquien Anaïs Jehin Maxime Xhauflair Gilles 1
Feb 26, 2016
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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