Business Analysis of SONY Corporation

SONY business analysis

Tokyo, Japan-based SONY corporation, is a leading name in consumer electronics, gaming, and entertainment. The company has a diversified product portfolio and sells in many markets across the globe. SONY is also a leader in imaging and sensing solutions. The company has enjoyed robust growth in recent years, but its growth plans seem to have struck a roadblock due to Covid-19.

The company has grown its focus on innovation to beat the fast-growing competitive pressure in various industries from gaming to entertainment and consumer electronics. Due to the heavy price competition in the consumer electronics industry, SONY lost market share across some key product categories, including Televisions, cameras, and smartphones. In the smartphone industry, SONY’s market share is minuscule. Chinese brands are aggressively snatching market share away from other brands in Asian markets, including India and China. However, SONY is still a leader in the gaming, music, movies, and imaging industries. The company is also investing in several latest technologies to open new channels of growth.


SONY net sales 2015-2019.
SONY net sales 2015-2019 (Billion Yen).

This is a detailed analysis of SONY corporation’s global business, a leading player in the consumer electronics, gaming, imaging and entertainment industries.

External Analysis of the consumer electronics industry

According to GM Insights, the global consumer electronics market was valued at $1 Trillion in 2019 and is expected to grow at a CAGR rate of above 7% between 2020 and 2026. The market growth is mainly driven by the increased R&D investment by the leading players to develop new and more efficient consumer electronics products, including smartphones, smart wearables, and home appliances. 

The consumer electronics industry has grown faster in recent years driven by growth in sales through digital channels. During 2020, when sales received a blow following the shutdowns globally due to the pandemic, e-commerce emerged as a bright spot for the players in the consumer electronics industry driving most of the sales and growth.

Internet penetration in key markets including the US, the UK and China has also been growing rapidly which indicates faster growth across e-commerce sales in the leading markets. However, while technological evolution has presented several significant new opportunities for consumer electronics brands, the industry is also dealing with many new challenges that can hamper growth. Shorter product life cycles and growth in the number of variants across key product categories has created new growth barriers for the consumer electronics brands.

The technology landscape is changing very fast and people are living highly digitalized and connected lives. All these factors are encouraging the consumers to go for devices that are equipped with the latest technologies. The consumer electronics market has grown highly competitive and there are several challenges before the manufacturers. Apart from reducing their product development time, they also need to cut the time they take to bring new models to the market shorter to sustain in a hypercompetitive market environment. 

When the physical retail channels were shut down during the pandemic, consumers turned towards digital channels and online retailers like Amazon and Walmart in record numbers. However, people shopped for PCs, laptops, and consumer electronics online even before the pandemic. Digital channels were already heavily popular for buying mobile computers and consumer electronics in the US and other advanced markets.

SONY business analysis - e-commerce retail sales in the US by product category (2020).
Source: eMarketer.

According to e-marketer, computer and consumer electronics products represented the largest category of products sold on e-commerce channels. Their share of total e-commerce sales in the United States stood at 22%. According to September 2020 forecast by e-marketer, total PC and consumer electronics sales in the US through online channels would amount to $156.9 billion, which was almost half (49.5%) of the total PC and consumer electronics sales in the US market during the year 2020.

E-marketer notes,

“By and large, the computing products and consumer electronics industry accounts for the bulk of digital ad spending by tech companies. Business-to-consumer (B2C) companies like Apple, Dell, Samsung, and Sony fall into this category, as do B2B service providers like Adobe, Cisco, IBM, Microsoft, Oracle, and other IT firms. We also include internet, cloud, and software solutions providers like Intuit, Salesforce, Shopify, and Zoom. Game console makers, shared economy apps, and mobile payment platforms belong in this category as well.”

Emarketer. September 2020.

Gaming Console Industry and SONY:-

SONY is currently the largest player in the game console market. Its PlayStation 4 is the most popular gaming console worldwide and holds the largest market share of all gaming consoles in the market.  

According to Statista, the total revenue generated from gaming consoles in the United States will reach $6.94 billion in 2021. The Chinese market will lead the global gaming consoles industry in terms of sales and generate around $19.7 billion in net revenue from the sales of gaming consoles. Per person revenue from sales of gaming consoles is going to be $20.83.

In 2019, SONY’s PlayStation 4 was the best selling video gaming console. It has sold more than 100 million units in its history and is the second most selling gaming console after PlayStation 2, which has sold 157 million units.

SONY is currently ahead of its nearest competitors, including Microsoft and Nintendo. The company experienced a decline in unit sales of PS4 hardware in fiscal 2019, but it is still the leading player in this industry. PS4 hardware is also a major source of revenue for the brand.

STRENGTHS of SONY CORPORATION

Brand Image:-

SONY has achieved the image of a quality-focused, customer-friendly and ethical brand. Its brand image is a key driver of sales and revenue growth for the company worldwide. Millions of customers around the globe trust SONY for its great quality products. 

While SONY is not counted among the industry’s best marketers, its brand image is still strong support for the company driving faster revenue growth and market expansion. While SONY products are generally priced higher than the competitors, its distinguished quality still drives higher sales. The company has achieved a distinguished position in the global markets and the industries in which it operates.

SONY’s focus is not just on quality and innovation but also on sustainability and business ethics. All these factors are important for businesses that want to achieve a strong social image. Particularly, CSR and sustainability have been recognized as among factors that help build a strong social image. SONY’s brand image helps it achieve higher customer loyalty and easy brand recall. 

Diverse product portfolio:

SONY's diversified product portfolio
SONY’s diversified product portfolio includes digital cameras.

SONY makes and sells a large and diverse product portfolio that includes products and services like consumer electronics, music, movies, imaging, and sensing solutions, and more. 

The company has divided its business operations into five major segments: Game & Network Services, Music, Pictures, Electronics Products, and solutions, as well as imaging and sensing solutions. The company has continued to diversify its product portfolio for market expansion and to grow its profitability.

 In recent years while the market for SONY televisions and digital cameras has shrunk, its imaging and sensing solutions have experienced faster growth in sales. The demand for its imaging and sensing solutions has grown among smartphone makers, leading to growth in this business segment’s profitability. In 2019, while its gaming and network services and electronics products and solutions segments experienced a decline in sales and revenue, the music and pictures segments and the imaging and sensing solutions segment experienced growth. The reason was that apart from a reduction in sales of televisions and digital cameras, the company also experienced reduced sales of PlayStation 4 hardware. However, due to its diversified product portfolio, the company was able to substantially reduce the negative impact of the pandemic and the reduced demand for its gaming and electronics products.

The company is also investing in other latest technologies to gain inroads into new business areas.

Product quality:

SONY has remained a leading name in the consumer electronics industry mainly because of its focus on quality. The company is known to make and sell premium quality televisions, music players, speakers, and other products. Its products are also differentiated from its competitors on the basis of quality. Its continued focus on quality has also resulted in higher customer loyalty as well as strong sales worldwide. 

Despite the growing competition from several players including Samsung and other consumer electronics brands like LG and Panasonic, the company has not let its focus on quality dwindle. Moreover, its focus on quality is not limited to just a few leading products but to almost all business areas in which SONY operates. From digital cameras to televisions and music players as well as movies, the company is famous for its exceptional focus on quality. However, the growing price competition has also led to reduced profit margins for the brand. Despite that SONY has managed to retain its quality level and that has helped it manage its strong market share in key industry sectors.

Technological Innovation:

Another major strength of the company is its focus on product innovation. SONY is known for having introduced several groundbreaking products and technologies. Its products are known to be of superior quality and differentiated from competing products and brands. Its focus on innovation has helped the company introduce several innovative products to the market that offer a superior customer experience. Whether, it is about SONY televisions or digital cameras, or its other products and solutions, its focus on technological innovation has helped it introduce products that are exceptional in terms of performance and quality. 

Customer Loyalty:

SONY is a leading name globally in various industry sectors including consumer electronics, music, movies and other sectors. However, the company has acquired  a large and loyal base of customers through its relentless pursuit of quality. Throughout the world it has a very large and loyal base of PlayStation customers. Apart from that, SONY is a highly trusted brand globally. The company, apart from remaining dedicated to quality and innovation has also remained dedicated to ethics. These factors have helped it build a superior brand image and achieve strong customer loyalty. 

WEAKNESSES:

Falling PS4 Sales:

The company is experiencing a reduction in PS4 sales which had remained a key driver of revenue for the company. Due to the heavy reduction in sales of PS4 hardware during fiscal 2019 as well as reduced sales of televisions and digital cameras, the company experienced a fall in its overall operating revenue. PS4 is facing heavy competition from other players including online gaming channels and makers of gaming devices like Xbox and Nintendo. 

In fiscal 2019, the company sold only 13.6 million units of PS4 hardware compared to 17.8 million units in fiscal 2018. Apart from the negative impact of the pandemic and supply chain disruption, the competitive factors were also responsib le for the decline in sales of PS4 hardware in fiscal 2019 (ending March 31, 2020)

Not just the PS4 hardware, but SONY also experienced a decline in sales of its televisions and digital cameras during fiscal 2019, which also caused its operating revenue for the fiscal to decline.

SONY sold only 9.3 million units of televisions in fiscal 2019 compared to 11.3 million units in fiscal 2018. Sales of digital cameras declined to 2.9 million units in 2019 compared to 3.6 million units in fiscal 2018. The sales of SONY smartphones also dropped to less than half of the previous fiscal in 2019. SONY sold only 3.2 million smartphones in fiscal 2019 compared to 6.5 million units in fiscal 2018.

Lack of focus on marketing:

While SONY is known as a highly innovative brand and exceptional in terms of quality, the company has not been as exceptional in terms of marketing as the brands it is pitted against in the market. The decline in sales of consumer electronics  products made by SONY can also be attributed partially to the lack of a focussed marketing strategy.

SONY is facing intense competition in the global market. Several brands have introduced a large number of products that even if not as great in terms of quality, come loaded with the latest features and appeal to a large group of customers looking for quality products available at affordable prices. From televisions to smartphones and digital cameras, the company is known for its exceptional quality but has been losing market share to rivals because of poor marketing as well as premium pricing.

The company needs to develop a focussed global marketing strategy to retain its market share in key industry sectors and for retaining its large and loyal customer base from around the world.

Price pressure:-

The company is facing heavy price pressure. The continued loss of market share and a decline in sales and profitability during fiscal 2019 can be attributed mainly to the company’s premium pricing strategy. 

Many companies have entered the fray, including companies based in South Korea, Japan and several more based in China. The Chinese companies, especially those with access to cheaper resources, including cheaper labor, have introduced products at much lower prices. The result is that while profit margins have shrunk for SONY, the company also has to spend more on marketing and research, and development to maintain its market position and market share.

The company experienced a sharp decline in sales of key products in 2019 that have remained the leading source of revenue for it for years. Some of the decline in sales was caused mainly due to the premium pricing of SONY products. The problem is that if SONY wants to maintain its products’ quality, it cannot price them lower since it has to invest a lot in raw materials, marketing and R&D. Pricing them lower can also lead to a perception of lower quality products among the customers worldwide. Overall, while price competition is ruining SONY’s sales in various corners of the world and particularly, in the emerging economies where increasingly the Chinese brands are gaining market share, the company does not have a great option before itself apart from rethinking its marketing and business strategies.

Low share in the smartphone market

SONY Business analysis
SONY Xperia Pro.

SONY’s market share in the global smartphone market has kept shrinking over time. Apart from its premium pricing, lack of innovation is also an important factor that has caused sales to fall. The company sells premium Xperia phones that are priced higher than most smartphones available in the market. As a result, these smartphones are positioned against premium phones like the iPhone or the upper range models in Samsung’s Galaxy range. 

India has grown into the second-largest smartphone market surpassing the US in 2019. However, in the same year, dwindling sales forced SONY to exit this highly lucrative market. The reason was that apart from Apple and Samsung, the best selling brands in the Indian market are from China. These brands have brought a large range of products that are priced competitively and as a result, acquiring sales is much easier for them. 

Apart from that, SONY also lacks in terms of marketing. Where other smartphone brands have been marketing their products quite aggressively in India and other smartphone markets like China and the US, SONY’s marketing approach has not changed a lot over the years. The company does not have any entry-level or mid-range phones either to offer that can drive sales higher. However, while SONY is currently among the bottom players in the global smartphone industry, it has not totally exited it. The company might introduce new models that are priced competitively to spur sales again.

 OPPORTUNITIES:

Latest technologies:

SONY’s opportunities lie in the latest technologies. The company has already entered the automobile sector with its Vision-S. According to Wikipedia, SONY Vision-S is an all electric concept sedan, that was first unveiled at the 202 consumer electronics show. The company has developed this Sedan in collaboration with many automobile companies including Magna International, Continental AG, Elektrobit, Benteler and Bosch. 

The car features SONY’s latest technologies related to the automobile sector including autonomous driving technology, sensory devices, as well as, always-on connectivity. The car also comes loaded with immersive entertainment features. 

In 2020, the car included a drive assistance system like Tesla’s called the Safety Cocoon. It had 33 sensors onboard including CMOS, solid state Lidar, and time of flight cameras. SONY has grown its focus on research and development so it can expand its business into new areas including AI, Cloud technology and other latest technologies like machine learning. 

If SONY’s automobile project (Vision-S) is successful, it could prove to be a driver of revenue for the brand. Due to its shrinking share in the consumer electronics industry, the company needs to focus more aggressively on the latest technologies to sustain its market position and growth momentum.  

Digital marketing:-

While SONY is recognized globally as a great consumer electronics brand, it has kept lagging behind its American and South Korean counterparts with regards to marketing. Its Xperia phones compete with Apple’s iPhone and other high-end smartphones made by brands like Samsung and One Plus. However, when it comes to marketing, SONY has mainly relied on its loyal customer base for word of mouth and to maintain sales. 

Without developing a new marketing strategy or adopting improved customer retention methods, the company cannot expect to grow the sales of its key products including televisions, cameras, and smartphones. 

In the 21st century, CRM has become a key area of focus for businesses. Technology and consumer electronics businesses have to particularly focus heavily on customer relationships if they want to avoid losing market share. The focus has shifted from great quality products to great quality customer experience and from marketing to sales and after-sales service, the focus is always on customer satisfaction. 

While SONY is still a highly trusted consumer electronics brand worldwide, if it is losing market to its South Korean and Chinese rivals, the reason is that the company did not focus enough on marketing.

Compared to SONY, Apple and Samsung have done a much better job. However, it does not mean that SONY has totally lost the game. It must focus on reaching out to customers using digital marketing methods. Social media marketing could also help the company grow its reach and penetration in the emerging markets. SONY moved rater lousily in this area, and the result was that the market for SONY products, despite their quality, kept shrinking. If the situation persists, SONY risks losing its most loyal customers. The company must use digital channels like Facebook and Youtube for digital marketing and video marketing and engage its customers. While in the short term, it can help the company drive sales higher, in the longer term, it will help the company acquire its lost market share in key market regions. The company can combine its digital marketing capabilities with its existing strengths to expand its global customer base.

Emerging economies:

The emerging economies present the most significant opportunities before the consumer electronics brands like SONY. A large number of Chinese and South Korean brands have been focussing aggressively on growing their penetration of emerging economies like India, Malaysia, Brazil, Indonesia, and others. 

Currently, the two largest  markets for SONY products are Japan and the United States. However, while the company has been  building great products and has a great product strategy, it does not seem to be focusing on creating strategies tailored for specific market regions. 

Apart from local economic and political developments, the pandemic has also affected SONY’s business in several markets. The rivals were able to exploit the opportunities in the emerging markets successfully where SONY failed and in some cases was forced to exit.

SONY must focus again on markets like India, China, Brazil, Malaysia and Indonesia where its most significant opportunities lie. While these economies have enjoyed higher economic activity in recent years, the growing middle class in these economies also presents a significant opportunity for the consumer electronics companies.

Acquisitions and diversification:

SONY’s revenue fell in fiscal 2019 compared to the previous fiscal. The company needs to focus on methods of creating new channels of growth and achieving market expansion. Acquisitions can help the company diversify into new business areas. They can also help the company strengthen its position in the existing areas. For example, in fiscal 2019, the company acquired AT&T Inc.’s minority stake in Game Show Network, LLC and acquired Silvergate Media Group through which Sony aism to cement its position as a leader in the U.S. TV game show business (SONY form 20f, fiscal 2019).

The company can acquire smaller businesses to enter into new areas in emerging fields like AI, machine learning, etc. Its recent acquisitions like the Game Show Network, Bilibili and Epic Games (SONY holds a small stake in both Bilibili and Epic games) were mainly related to entertainment and video games. The company should shift its focus towards the latest technologies to make its business more future ready compared to its rivals.

Customer focused innovation:

While SONY is known as an innovative company, it has missed one key area that is understanding the evolving customer needs and preferences. It is why SONY must be focused on innovation that customers love or making products that suit their customer needs better. 

The key thing is to understand how customers’ needs are evolving with time and create products accordingly. Until now, the company has been making innovative products, but it cannot rely solely on the quality of these products to sell them. The company must understand customers’ needs and design products accordingly to drive sales higher. The secret to achieving higher sales and winning more customer loyalty is to focus on innovation that suits the customers’ needs. 

SONY’s rivals seem to have mastered this art but SONY itself seems to be missing the more important side of the coin. The question is not just to innovate but to innovate for customer’s satisfaction. This could also help SONY add more life to its existing products and grow their appeal for the customers. Differentiation has already become difficult for consumer electronics companies because of the heavy competition in the market. The rival brands are also investing heavily in research and innovation but the winner is the one that understands customers’ needs adn caters to them better.

Let’s take Apple’s example. The company does not just create products but multidimensional experiences. Apart from that, it offers regular updates and also engages customers using various marketing channels. It is why customers love Apple. This is how companies like Apple achieve higher customer engagement. They know their customers’ needs and how to fulfill them. 

Samsung also followed the same route to win customers’ hearts. However, while SONY kept making great products, it seems the company missed the track long back and since then was also forced to discontinue some of its most attractive products like SONY VAIO laptops. It also applies to SONY’s smartphones and televisions. Understanding customer needs will allow SONY to differentiate its products further from the rival brands that are continuously expanding their market share. The company missed important innovations by a thin margin.

THREATS :-

Heavy competition:

One of the biggest threats before SONY’s market position is the heavy competition the company faces from brands based in the US, China, and South Korea. In the smartphone market, while it is pitted against Apple, Samsung, Xiaomi, and One Plus, in the consumer electronics market too, the company is facing strong competition from Samsung, LG, Panasonic, and other brands. 

Its market share of consumer electronics products has kept shrinking. While the company has grown its focus on research and development, in the coming years, its operating expenses could grow faster due to the growing competitive pressure. Apart from its production-related costs and R&D expenses, the company’s marketing expenses are also expected to grow faster in the future. Competition has hit SONY hard mostly in its core business areas. Its rivals like Samsung, Apple, Xiaomi, One Plus, LG, and others are also focusing aggressively on innovation which has become key to success. Many of these brands have adopted highly competitive pricing strategies to gain market share faster. They have adopted aggressive moves including adopting thin profit margins in many cases to win market share.

Its result is that they easily grew their market shares in important economies like India and China and SONY was forced to quit or remain satisfied with a much smaller market share. SONY could have easily ruled the market if it could early realize how competition could ruin its market share and growth rate. Customers have switched to other brands because it proved profitable for them. 

Coronavirus pandemic:-

The coronavirus pandemic has hit large and global businesses very hard. Apart from shutting down their supply chains and stifling the movement of goods across borders, it has also hit economies very hard including some of the biggest economies like the US and the UK. It led to lower purchasing by consumers in various economies as well as heightened pressure on hardware brands like SONY that experienced lower sales of PS4 and televisions. 

The company had started gathering momentum before the pandemic but several of its plans received an unexpected blow as the pandemic forced supply chains to shut down and the release of new music and movies got stalled. The impact of the pandemic is expected to last long. The use of digital channels for shopping and  entertainment has grown which also reflected in SONY’s sales in the Pictures and music segment but the impact has clearly been harsh on the consumer electronics and gaming products.

After the pandemic, SONY may be able to realize several of its important goals but for now the pandemic seems to have forced the company to hit the pause button. 

In a March, 2020 press release, SONY quoted that its music releases were going to be delayed due to the disruptions caused by the novel coronavirus. Its press release stated,

“Especially outside of Japan, the business has started to be affected by delays in new music releases, interruptions in supply chains for CDs and other physical music media, and a decrease in music licensing resulting from both lower advertising activity and delays in production for motion pictures and television productions. Concerts and other live events around the world are being cancelled or postponed, including all Sony-sponsored performances and events in Japan.”

SONY press release. March 2020.

Economic fluctuations :-

SONY is a premium brand, and the fluctuations in the global economy directly impact its business. Economic factors directly impact SONY’s business since the company’s sales depend on the purchasing power of the consumers worldwide. Japan and the US are the two most important markets for SONY products, followed by China and Europe. However, the pandemic has affected the US economy bringing sales of nonessential products down in the market. Similarly, fluctuations in currency exchange rates also harm SONY’s profits, which was again clearly felt at the end of fiscal 2019 (ending March 31, 2020) of SONY Corporation.

When the level of economic activity in key markets across the globe is high, brands like SONY enjoy higher sales and profits as people spend more on entertainment and consumer electronics. Before the pandemic, the company enjoyed strong sales and had made plans for the future related to market expansion. However, the pandemic and the resulting decline in economic activities worldwide applied brakes on SONY’s growth by stalling production and bringing sales down sharply.

Millions of people worldwide were rendered jobless after the pandemic and spending across various economies went down sharply. While in some economies like the US, China, and UK, economic stimulus provided by the government may work to stimulate economic activity, SONY’s plans in other markets may need to wait.

SONY PESTEL ANALYSIS.

Political:

The political factors and their impact on international businesses gained increased attention from researchers and media in recent years. Governments around the world are growing highly aggressive about the oversight and control of technology brands. 

Big tech is facing higher scrutiny in the US, China and Europe related to its anticompetitive practices. Companies in the tech industry or consumer electronics industry have to remain highly cautious about their image and the changing political climate in the markets where they operate. In some leading markets, for example, India, China and the US, it is almost impossible for businesses to find growth without understanding the local political climate.

Apart from it, the political relationships between nations also have a sharp impact on businesses operating in those markets. SONY is headquartered in Japan, which is also its largest market. However, some of the largest markets where SONY operates like India and China have highly complex political structures and the level of complexity involved in entering and operating in these nations is also higher. 

Comparatively the US, the UK and other Western nations are more open to foreign Direct Investment. SONY has maintained a strong image as a consumer electronics and gaming business worldwide. Apart from that, the company’s focus is the highest on integrity, sustainability and customer satisfaction. All these  factors have helped it maintain a strong image and the company has mostly avoided any form of government action. Compared to many of its competitors SONY’s image in most markets is much cleaner. 

For example, even Samsung has faced strong government and legal action in various cases. Major international businesses like SONY need to keep in mind that to win in specific markets, it must keep the political environment there in mind when forming a business strategy to avoid the political hurdles that can otherwise cause sales to fall or business performance to slow down. In many cases, government policies, subsidies and actions can make or destroy particular industries and consumer sentiment.


Economic:-

Economic factors like the health of the global economy, the individual economies in which the business operates, unemployment level, GDP growth rate, and per capita income among others can have a direct impact on businesses trying to operate profitably in particular markets. International businesses have to stay mindful of these factors to maintain their sales and profitability. 

During periods of economic decline, people spend less on entertainment and other nonessential items.  When the global economy is experiencing lower activity, the level of employment declines. It leads to lower per capita spending and in turn consumer electronics or entertainment brands may experience reduced sales and profitability.

SONY had been experiencing strong growth in some areas. However, as the pandemic struck, the company also experienced a decline in sales in key areas caused by the supply chain disruption and pandemic induced recession. Millions around the world lost their employment and were forced to cut down non essential expenses. The entertainment industry also received a strong blow as the release dates of many movies and music releases were postponed. SONY’s sales also fell due to the pandemic. However, economies have reopened and vaccinations have started which could help all the leading economies revive faster. This can help the company gain stronger sales again in some critical areas including gaming and entertainment. 

Higher economic activity helps drive faster growth for consumer electronics  businesses worldwide. As economic activity starts reviving worldwide, it will drive higher sales for all the consumer electronics brands including SONY. With growth in employment and spending across key economies, consumer electronics, gaming and entertainment brands are most likely to experience after growth in sales. 

In the third quarter of fiscal 2020, the company experienced a sales growth compared to the same period last year, which reflected the changing economic environment worldwide. While the net revenue of the company for the 3rd quarter of fiscal 2020 grew by 9% compared to the same period previous year, its operating income grew by 20%. The gaming and network segment as well as pictures and music segment of the company also experienced impressive growth driven by economic reopening and growth in economic activity in key markets worldwide.

Keeping these factors in mind, it is critical for consumer electronics businesses operating globally to focus on economic factors and the global economic environment to find faster growth and gain sales and profitability. Economic factors are a key consideration related to business strategy and must be taken into account not just on an annual basis but also during the management’s quarterly meetings.

Sociocultural: 

Sociocultural factors have also gained relevance in the field of business marketing. A lot of management literature highlights the relevance of sociocultural factors in relation to business’ performance and operational success. Sociocultural changes can impact the destiny of businesses in several ways. With time their impact on businesses has become more and more clear.

 It is because with changing societies and consumer preferences businesses need to alter their strategy to suit the evolving needs and market dynamics. However, not just in terms of business operations or for performance gains in various market regions, but sociocultural factors are also a key consideration in terms of marketing. Marketers that consider these factors experience higher returns on their marketing investment.

Across societies, consumer behavior has changed fast in recent years. While many of these changes were a result of the changing demographic composition of the global population, technology also remained a key factor apart from globalization driving sweeping changes across the globe. People’s lifestyles have changed a lot with the growing use of digital technology, smartphones, and the internet worldwide. While a huge segment of the global population now uses smartphones for online shopping, entertainment and connecting with others, consumer electronics businesses like SONY have altered the way they marketed their businesses or offered post sales service.

Marketers are also increasingly adapting to the changing needs and shopping styles of people. While the focus of businesses has grown on customer experience, businesses are also trying to respond to customer needs using new channels, methods and tools. Apart from these things the focus is also on higher personalization to attract and retain customers and maintain user loyalty. However, to ensure success in any specific region across the globe, companies need to focus on the sociocultural factors so they can craft their marketing messages for higher impact and achieve superior returns on their marketing investment. 

SONY markets its brand and products across several regions with varied cultures. However, at the core it is a business that is identified by its customer focus, product quality and ethical image. Still, sociocultural factors are important for the company since operating in various regions of the globe, it requires to adopt suitable strategies for different local markets. This is not just true in terms of marketing success, but also applies in the areas of HR and employee engagement.

Technological:

The importance of technology as the driver of business success has grown all the more highlighted with increased competition in industries including consumer electronics, entertainment, gaming, music and others. SONY has a large and diverse product portfolio and  operates in several industries. However, across all these industries where the company has achieved a leadership position, the main factor driving SONY’s success is its focus on innovation.

SONY is mainly  a technology brand and its global fame and success rests mainly on its product quality and the ability to innovate. The company has brought a large range of technology products and innovations, several of which were the world’s first. SONY products are known worldwide for their quality and technology. Its products from SONY cameras to televisions and other products like smartphones are known best for their quality and the superior customer experience they offer. 

In recent years, the company has also grown its investment in digitalization to grow sales and profitability apart from increased investment in research and development.  Technology is driving key changes across the entire consumer electronics and gaming industries. Apart from higher innovation, it is also driving higher competition across the industry. SONY faces intense competition from several industry leading consumer electronics and gaming brands like Samsung, Apple, Xiaomi, Xbox, Panasonic and others. However, while technological evolution has added to the level of competition in the industry, it has also opened new vistas of growth for the consumer electronics brands. With higher competition, differentiation is now tougher than ever. However, the result is that brands in the consumer electronics, gaming and other industries are placing heavier focus on technological innovation. 

Technology  has changed the way people shop and the way they consume various services including entertainment. People do not just shop online, they also use online streaming services and social media for entertainment, resulting in reduced dependence on physical channels of entertainment. People are using smartphones mainly for their entertainment and shopping related needs. 

While these changes have led to reduced demand for a few SONY products, the company has also entered new  areas of business or employed innovation to gain and retain market share. Its imaging and sensing solutions business can be a new channel of faster growth. Apart from that, latest technologies like AI, Machine learning, automated driving technologies etc. have also opened new avenues of growth for the brand. SONY has entered the automobile segment with its Vision-S project. As a part of the project, SONY is developing a car in partnership with other brands with automated driving technology and connected features as well as superior entertainment features.

In this way, technology has proved to be a major driver of change and higher success for SONY. While the company has benefitted from its focus on innovation in nearly all of its areas of business operations, it is also experiencing higher competition and there is always the fear of market disruption. So, technology has proved to be a mixed bag of opportunities and threats for the company. Still, the future of the company depends a lot on its ability to innovate and if the company wants to find faster growth and beat the competitive pressure, it must technology a central pillar of its business and marketing strategy. Digital marketing can also drive faster growth for the business, higher customer engagement and customer loyalty. Large companies have several tools and technologies at their disposal to automate marketing processes and manage customer experience at every point of contact from marketing to sale and after sales service.

Environmental:

Research has highlighted the importance of sustainability as a driver of business efficiency and business success as well as a stronger brand image. All the leading brands in various industries from automobiles to consumer electronics and technology, are investing in sustainability to manage their carbon footprint and reduce their use of environmental resources. The focus of governments and communities on the environmental impact of businesses had already been strong but has strengthened since the pandemic. 

Now, companies need to remain even alert about their environmental impact since various regulatory agencies including governments worldwide and the European Union have adopted stringent environmental protection laws. SONY is already a leader in the area of sustainability. The company also publishes an annual sustainability report.

Some of the key areas where SONY has placed its focus in terms of environmental impact include climate change, resource conservation, chemical substances and biodiversity. The company has also achieved many key milestones in several important areas in the fiscal year 2019. The company strives to achieve a zero environmental footprint throughout the lifecycle of Sonyʼs products and business activities. It achieved reduced CO2 emissions in fiscal 2019 compared to the previous year.

While SONY has continued to strengthen its focus on environmental sustainability on the one hand, on the other, it has made detailed plans for the future as well. The company has also maintained a strong social image and continues to invest in corporate social responsibility initiatives. 

Legal:

Legal factors have gained very high relevance in the 21st century in terms of business operations. Law and legal agencies worldwide have increased their oversight of large and international businesses. Any type of violation in any area of business operations from marketing to manufacturing, finance, customer privacy and other areas may result in hefty fines. It is particularly true in the context of technology businesses.

For example, let’s take the big tech in the United States. The largest four or five players have faced several legal battles, some related to customer privacy, others related to monopoly and anticompetitive behavior. From Apple to Google, Amazon and Facebook, all of them are facing continuous legal battles and heavier scrutiny.

SONY through its focus on ethics and compliance has been able to avoid any major legal battle and maintain a  strong image. The company has implemented a global ethics and compliance program. 

The company notes about the program,

“Sony’s ethics and compliance program is designed to manage key group-wide risks and create a culture of integrity to ensure ethical and responsible business conduct. Sony’s program is continuously improved based on evolving best practices and global regulatory expectations. The Sony Group Code of Conduct is the cornerstone of Sony’s ethics and compliance program and supports Sony’s diversity as well as commitment to creating social value.”

The company regularly updates and revises its ethics and compliance program. In 2020, the company was honored for the second time consecutively as one of the world’s most ethical companies.

Brands like SONY need to steadily focus on their compliance program organization wide. It is essential if the company nenslures that organizationwide, people are doing business ethically and it is able to avoid any form of non compliance which can otherwise lead to hefty fines and legal action.

What is the BCG matrix?

The BCG matrix or the Boston Consulting group Growth Share matrix is a planning tool used internally by management to decide which products are the most profitable and which ones to invest in as well as which ones to sell or divest. The matrix includes a graphical representation of the company’s products and product categories in the form of a four square matrix.

The Boston Consulting Group introduced the BCG matrix first in 1970. The matrix has four squares or categories: Stars,  Cash Cows, Question Marks, and Dogs. These four categories take the form of four quadrants in the BCG matrix. The Y-axis represents the market growth rate in this matrix, whereas the X-axis represents the market share. The four categories which are a part of this matrix have their own set of unique characteristics.

Stars :

Stars are products in high growth markets with a large market share. These are the products that the company can further invest in to cement its position in the industry and markets. They are located in the upper left quadrant of the matrix. While they generate huge amounts of income for the company, they also consume cash in huge volumes. Stars can eventually become cash cows if they can remain market leaders and when the market’s growth rate falls.

Cash Cows:

Cash cows are the products in low growth markets but where the company holds a significant market share. A company must milk its cash cows for profits for as long as possible. Generally, cash cows are market leaders in mature markets. The profits these products generate are typically higher than the market growth rate and are good for a company from the cash flow perspective. It is why companies need to take advantage of their cash cows for as long as possible.

Moreover, the value of cash cows is highly predictable since their cash flow patterns are highly predictable. Companies must milk low growth high share cash cows for cash to reinvest in the high-growth high-market share stars holding higher future potential. The cash cows are found in the lower-left quadrant of the BCG matrix.

Question Marks:

Question marks are like opportunities with an unclear or questionable future. These products are in high growth markets but without a large market share. They are in the upper right quadrant of the BCG matrix. These products can grow fast, but they also consume the company’s resources in huge amounts. Companies need to analyze these products regularly and closely to check if they are worth maintaining. If the company does not see much potential in them after watching regularly, it must not keep them. 

Dogs: 

Dogs are products in low growth markets and with low market share. These products may sometimes prove to be cash traps that keep consuming the company’s resources, including cash and other resources. Because of their low market share and little to no growth, such products hardly generate cash for the company. Such products need to be sold out or liquidated, or repositioned. However, they can also keep the company’s funds tied for long periods of time if they are not divested. Companies should watch dogs closely to see if they are only consuming resources and divest them instead of wasting more time and resources.

SONY Corporation BCG Matrix:

SONY has a highly diverse product portfolio. While some of them have remained significant sources of profits for long periods, like its Play Stations and Televisions, the time and consumer dynamics are changing. As such, the company may need to liquidate or divest some of its least profitable products as it did with SONY VAIO laptops. It is the right time to analyze the company’s portfolio to check out which of its products may need repositioning and which ones are worth keeping.

The competition against SONY has kept growing fierecer, and its growth now depends on the innovation and management of its portfolio. SONY realigned its business in fiscal 2019 since the company experienced a decline in sales across key product categories. Some of the most profitable products like smartphones and Televisions experienced a drop in sales in recent years caused mainly by the growth in competition and the pandemic. However, its new product segments have helped it build growth momentum. In this matrix, we will see which of its products have succumbed to the growing competition and become question marks or dogs from Cash cows and Stars and which ones have risen from question marks to become cash cows or stars.

STARS.⭐
Imaging and Sensing Solutions.
Movies.
Music Releases.
QUESTION MARKS. ❓
Consumer electronics
Audio systems
Digital cameras
Vision-S (automobiles)
CASH COWS.🐮
Play Stations and gaming software.
Televisions.
DOGS. 🐶
Xperia Smartphones.
SONY BCG Matrix.

STARS:

The imaging and sensing solutions of SONY corporation are the leading stars in its product portfolio. Apart from being in a high growth market, the company is also a market leader in this sector and owns a large market share. The imaging and sensing solutions segment of the company experienced stellar growth in fiscal 2019. It was also why the company could successfully retain a lot of its growth momentum and profitability. In contrast, many other profitable product segments of the company experienced a significant decline.

Other major stars in the product portfolio of the company are SONY’s movies and music businesses. While these segments’ growth rate stalled during the pandemic, they will again start growing once the impact of the pandemic is brought under control. Despite the pandemic, these two segments experienced significant growth during fiscal 2019 (ended March 31, 2020). So, the growth rate of these two segments can be superior after the pandemic, and the company also has a significant market share in both these sectors. The market share of SONY/Columbia pictures in the North American market, one of the leading markets for movies globally, was 22.2% in 2020 compared to 11.7% in 2019.

CASH COWS:

SONY’s biggest Cash Cow is its PS4 hardware and gaming software.  While several of its consumer electronics products were also its cash cows, their future seems to be bleak due to the heavy competition and Chinese players’ entry. The Chinese brands sell competing products at lower prices globally. In fiscal 2019, the sales of PS4 hardware also dropped significantly, but it remained among the company’s largest sources of revenue. The gaming segment of the company remained its second largest source of revenue. 

Apart from that, the television business of the company is also one of its cash cows. While the company’s television business experienced a decline in profitability in fiscal 2019, it remained one of the leading revenue sources for the brand. Some years ago, SONY had more cash cows, but now it has fewer of them since its consumer electronics products like cameras and audio systems steadily met declining sales.

QUESTION MARKS :

Several of SONY’s cash cows have become question marks in recent years since their sales have kept dropping steadily due to the growing competition and heavy price pressure. As a result, SONY’s margins from these products have also kept shrinking. Its sales of audio and video systems and digital cameras have kept dropping steadily, and their future has grown bleaker with increasing competition in the industry. SONY makes premium products and is facing heavy price competition from the Chinese brands especially. As a result, its share in these markets has kept dropping. SONY can either increase its market share in these segments through higher spending on research & development and marketing or will have to liquidate some of these businesses in the future. 

SONY’s new automobile project Vision-S is also a question mark. Until SONY starts seeing some initial success in this area, it would remain not easy to say if the company will be able to turn it into a Star or cash cow.

DOGS:

SONY’s Xperia smartphones are experiencing higher competition globally from many brands, including the Chinese, South Korean, and American brands. As a result, their sales have kept falling year on year. SONY’s revenue and profits from its smartphones have also reduced significantly.

The main reason behind the declining sales of the Xperia smartphones is the increasing competition, but apart from that, these products’ premium prices are also a significant reason. SONY has completely lost market share in the smartphone industry. Unless the company can increase its market share through competitive pricing, research, and development or marketing, it will need to divest its smartphone business since it is also consuming its resources.

Porter’s Five Forces Analysis of SONY

One of the simplest tools used throughout the industry and academic circles for analyzing firms’ competitive position and the level of competition in a particular industry is Porter’s five forces model. This analytical model was named after Michael E Porter, who created it.

Harvard Business School.

In a 1979 article titled How Competitive Forces Shape Strategy, published in the Harvard Business Review, Michael E Porter noted regarding this model that the collective strength of these forces ultimately determines the profit potential of any industry; and it can range from intense to mild. The profit potential grows as these forces weaken.

In each industry, a different force may grow more prominent compared to the others. Porter offers three examples in his HBR article. In the ocean-going tankers industry, the buyers are the most important force, whereas, in the tires industry, it is the powerful OEM buyers and tough competitors. On the other hand, in the steel industry, foreign competitors and substitutes are the most prominent forces.

In Porter’s words

“Every industry has an underlying structure, or a set of fundamental economic and technical characteristics, that gives rise to these competitive forces. The strategist, wanting to position his or her company to cope best with its industry environment or to influence that environment in the company’s favor, must learn what makes the environment tick.”

Michael E Porter in his HBR article, How Competitive Forces Shape Strategy.

Let us take a look at the forces that affect firm position and performance in the consumer electronics and gaming industries where SONY operates and holds a large market share.

Bargaining Power of Suppliers

The bargaining power of suppliers is higher in the following cases:

  • It is dominated by a few companies and is more concentrated than the industry it is selling to.
  • The products the supplier sells is unique or at least differentiated, or if it has built up switching costs.
  • It is not obliged to contend with other products for sale to the industry.
  • Itr poses a credible threat of forward integration into the industry’s business to which it sells.
  • The industry is not a significant customer of the suppliers’ products or the supplier does not generate a significant revenue from the particular industry. 

SONY does not disclose detailed information about its suppliers, who they are and where they are located. The company keeps its supplier information confidential. Its product portfolio is highly diversified and therefore its suppliers too come from several different industries.

The company has established several manufacturing facilities in Japan. Outside Japan, most of SONY’s manufacturing facilities are located in the Asian region including China, Malaysia, and Thailand. The company has also established a manufacturing plant in the US. 

Like in the case of other consumer electronics and gaming brands, SONY’s suppliers are also fragmented. None of them poses any credible threat of forward integration except a few large brands that are its suppliers in the Pictures and Music segment. In the consumer electronics industry, companies generally source parts and raw materials from a large number of suppliers and do not depend heavily on single suppliers for components or raw material. 

The smaller size of the supplier firm also limits their bargaining power. SONY’s bargaining power is higher compared to most suppliers because it is a leading consumer  of their products and services. The SONY suppliers that hold some bargaining power are mainly limited to the movies and music industries. Overall, the bargaining power of SONY suppliers is moderate but low in the case of consumer electronics suppliers.

Bargaining power of buyers:

Buyer groups are powerful and hold substantial bargaining strength in the following cases:

  • Buyer groups can be powerful if they are concentrated and buy in larger volumes. If the fixed costs are high in the industry, the large buyers are particularly a potent force. 
  • Products are standard or undifferentiated or if the buyer poses a threat of backward integration. 
  • If the buyers earn low profits and are highly price sensitive.

SONY caters to the needs of both individual and corporate buyers. The company  makes a large range of products including consumer electronics and gaming products. It also makes imaging and sensing solutions which it sells to the smartphone makers mainly.  The large brands that buy from SONY are among its most influential customers which gives them extra bargaining power. The corporate customers that source components from SONY like the smartphone brands buy in bulk. SONY also makes imaging and sensing products for automobile businesses. Large businesses hold higher bargaining power due to their financial clout.

Individual customers do not hold substantial bargaining power but still their value has grown due to the increased competition in the global markets.  Apart from higher focus on marketing, the consumer electronics brands are also placing higer focus on innovation as well as customer experience. Customer acquisition related costs have also grown in recent years as companies struggle to expand market share in key markets. However, some of the factors that limit the bargaining power of customers include premium quality of SONY products, their high demand and popularity as well as the company’s focus on innovation. While the overall bargaining power of buyers is moderate, the level of bargaining power varies based on customer type. Individual buyers have lower bargaining power while the corporate buyers have higher bargaining power.

Threat of substitute products :-

The threat of substitute products is moderately high for SONY. The threat mainly arises from the products the competing brands in consumer electronics, music and other industries where SONY operates sell. From Samsung to Apple, Panasonic, LG, and Xbox among others, there are several brands that compete with SONY in the global market. Samsung makes televisions, and smartphones and competes with SONY in almost all the leading markets across the globe. 

If SONY’s market share in the smartphone industry has continued to reduce over years, then it is mainly because the competing brands like Samsung, LG, Xiaomi, One Plus and others have continued to introduce models that are innovative, outstanding, good quality and competitively priced. The threat of substitutes has also kept growing higher for SONY due to its pricing strategy. 

The middle class customers want superior quality products at lower prices but the company has failed to manage its pricing strategy and therefore lost market share in the emerging economies. While SONY became a laggard and was forced to stay satisfied in the smartphone industry with a small market share, the company has not been able to build a smartphone model that can help it defend its market share against the other players.

In the gaming industry and music as well as movies industries too, the threat from rival players is high. However, SONY is a leading player in both these industries and also holds a strong market share. Still, the threat from substitutes remains high as competitors also hold significant market shares and are influential players. 

SONY is the leading player in the imaging and sensing solutions industry. The threat is somewhat lower in this sector from competing brands and substitute products. 

Threat of new entrants :-

SONY operates in diverse industry environments. It has a diverse product portfolio including consumer electronics, gaming products, music, movies, imaging and sensing solutions and other products. The threat of new entrants varies from industry to industry. In the consumer electronics industry, the threat of new entrants is lower due to many factors including access to raw materials, technological knowhow, capital requirements and talented human resources. Due to these factors, the ability of new players to enter the industry gets limited. Apart from the other things, government rules and regulations related to the industry also act as a barrier for new players. The incumbent players are quite aggressive about retaining their market share and that is what also increases the chances of retaliation against new players trying to enter the market.

In the music and movies industries as well as the imaging and sensing industry, there are similar barriers that limit the ability of new players to enter and grab market share from the incumbent players. Overall, the threat from new entrants before SONY is low. The company has established itself in several industries where it is among the most influential players. 

The market position and market image of the company also mitigate the threat from new entrants to major extent. In some industries however, the threat can be moderately higher due to technology. If Chinese brands have risen faster in the smartphone industry, it is mainly because apart from easier access to raw materials, they also had access to technological know-how and cheaper labor compared to SONY.

Competitive rivalry among the existing players :-

The level of competitive rivalry in the industries where SONY operates is very high. The consumer electronics industry is seeing a lot of stiff competition driven by the rise of the middle class, higher focus on innovation, technological evolution and a growing demand for technologically efficient products. The smartphone industry has enjoyed a lot of growth in recent years. However, SONY’s market share in this industry has eroded due to increased competition. 

The company exited the Indian smartphone market due to severe competition and fast declining profitability. SONY’s other consumer electronics products too have defaced a decline in demand in recent years due to intense competition and growing price pressure. The company’s margins eroded as Samsung and other leading rivals introduced products that compare with SONY’s products in terms of quality but are priced a lot more competitively. The competitive pricing strategy of SONY’s rivals gives them an edge in the market. It is why SONY’s growth in televisions fell while others like Samsung and LG gained. 

In the gaming industry too, the company is facing intense competition from the other players which reflected in the form of decline in sales of PS4 hardware during fiscal 2019. There are several leading players in the gaming hardware industry including Microsoft, Nintendo and NVIDIA. All these companies are very aggressive about growth and invest heavily in research and development plus marketing to grow market share. SONY is one of the leaders in the gaming hardware industry and its brand image has also helped it maintain its leadership position in the industry. However, the overall level of competition in the gaming hardware industry is still very high and SONY must continue to innovate to stay in its leadership position.

In the music and movies industries too, the company is facing intense competition but it has been relatively more successful in these industries and has been successful at retaining its market share and growth momentum.

SONY VRIO ANALYSIS:

The resources and capabilities of a company are its drivers of competitive advantage. Nearly all that a business owns can be classified as a resource or capability. By understanding the resources and capabilities of different enterprises, one can understand why overall performance differs from one business to another. To achieve a competitive advantage, the resource or capability that a  company owns needs to be valuable, rare, inimitable, and organized.

The VRIO framework comes to the help of managers when analyzing the company’s resources and capabilities. VRIO is an acronym that stands for Valuable, Rare, Inimitable, and Organized. These four bricks of VRIO represent the four properties of the resources and capabilities that lead to sustainable competitive advantage. When the resource or capability satisfies all the four requirements, the competitive advantage it generates will be sustainable, whereas, when it meets fewer standards, the competitive advantage will be temporary. 

Moreover, a sustainable competitive advantage comes from core competencies that arise from resources and capabilities.

SONY Corporation VRIO Analysis

Core competenciesValuableRareInimitableOrganizedAdvantage
Brand ImageYesYesYesYesCompetitive advantage
InnovationYesYesYesYesCompetitive advantage
Customer experienceYesYesYesYesCompetitive advantage
Product RangeYesNoYesYesTemporary advantage
Market PositionYesNoNoYesTemporary advantage
HRMYesNoNOYesTemporary advantage

Brand Image:

SONY’s brand image is a key capability driving its popularity and success in the global markets. Apart from driving, higher popularity and easier brand recall as well as superior sales, the company’s image also plays a key role in the marketing of the brand globally. SONY’s image is that of an innovative and ethical brand, which is why a very large number of consumers around the world love SONY.

Its brand image also differentiates it from other brands in the industry. The company has always focused on building a strong image. It is known for its customer centricity, focus on innovation and ethics as well as sustainability. Its brand image is a key source of competitive advantage for the brand.

Technological Innovation:

SONY is a market-leading brand in several industries including consumer electronics, entertainment, gaming consoles, and imaging and sensing solutions. However, the main factor that has aided its growth and success in all these areas is the company’s focus on innovation. The company has released several products and technologies that were the world’s first and many first of their kind in its domestic market.

Technological innovation is a key source of competitive advantage for the brand and has helped it differentiate its brand and products from its rivals. Moreover, the company has been able to diversify its product portfolio through technological innovation. If it were not for its focus on innovation, the company would not have been able to sustain its market share and leadership position in various industries. 

Customer experience:

In the 21st century, the focus on customer experience has grown and in nearly all industries, the success of a company depends on how heavily its focuses on customer experience. As a consumer electronics, gaming and entertainment brand SONY has focused on customer experience to grow its market influence and achieve the market leading position it enjoys.

Focusing on customer experience helps companies differentiate their image from rivals in the market. Superior customer experience leads to higher popularity, higher sales and growth in customer loyalty. It has helped the company sustain the competitive edge it enjoys over its rivals.

Product range:

SONY’s highly diversified product range is also a key source of competitive advantage for the brand. The company is not dependent on a single product category for its revenue and profits. Instead, it generates revenue from various products. While it is a leader in gaming consoles, it has also remained a leader in televisions and digital cameras as well as imaging and sensing solutions. Apart from that, the company also enjoys a substantial market share in the entertainment industry. 

While there are several benefits of having a highly diversified product portfolio, the leading benefit is that it does not need to depend on any single product category to maintain its growth momentum and profitability. It also gives SONY an edge over its rivals making it difficult for them to shake SONY’s market-leading position.

Market position:

The market position of SONY is also a source of competitive edge for the brand which it has retained through its focus on innovation, product quality, sustainability, and marketing. SONY is a leading player in the consumer electronics, gaming, and entertainment industries. Its leadership position drives superior sales and higher profitability in all the leading markets. However, the advantage that comes from the market position is only temporary.

HRM:

People are mostly behind all the sources of competitive advantage that a company has built. It is why they are among the most critical sources of competitive advantage for any brand. Their performance affects the profitability of a brand. In the 21st century especially, the role of human capital in organizational success has grown more highlighted. Companies are competing to attract highly skilled employees.

SONY has also grown its focus in this area to attract and retain highly talented people that can help it improve its offerings and serve its customers better. The company employed around 111,700 employees as of March 2020. It has adopted employee-friendly policies to attract and retain highly skilled employees.

Some of the key focus areas in HR management for SONY include diversity and inclusion, talent development, employee engagement, and occupational health and safety. While the company is performing well in this area, the rivals are also investing heavily in training and retaining their human resources. So, the advantage is only temporary, and the company needs to continuously focus on HR management and improve its HRM practices to win in a highly competitive environment.

SONY’s performance in the first three quarters of 2020

The table below shows SONY Corporation’s consolidated results for the first three quarters of 2019 and 2020.

Item.2019 Q1-Q32020 Q1-Q3
Operating Revenue.$59.9 Bn$63.9 Bn
Operating Income.$7.45 Bn$8.53 Bn
Income before income taxes.$7.4 billion$10.34 billion
Net Income.$5.24 billion $10 billion
SONY’s key financial results for 2020 Q1-Q3 vs 2019 Q1-Q3.

SONY’s net operating revenue in the first three quarters of 2020 climbed against the same period in the previous fiscal. The company experienced a 4% gain in its operating revenue and a 12% gain in its operating income during the first three quarters of 2020, compared to the previous fiscal’s first three quarters.

SONY’s net operating revenue from the first to third quarters of 2020 remained 6,778.9 billion yen ($63.9 billion approx.) compared to 6,511.1 billion yen ($59.9 billion approx.); YoY growth of 4% or 267.8 billion yen.

Sony’s operating income during the first three quarters of 2020 grew by 12% compared to the same period the previous year. The company’s operating income grew to 905.4 billion yen ($8.53 billion) for the 2020 Q1-Q3 period, compared to 810 billion yen ($7.45 billion) for the same period last year; YoY growth of 12% or 95.4 billion yen.

Sony’s income before income taxes for the 2020 Q1-Q3 period grew by 37% or 293.5 billion yen compared tp the same period the previous year. Its income before income taxes during the 2019 Q1-Q3 period was 803.4 billion yen ($7.4 billion) which grew to 1,096.9 billion yen ($10.34 billion) during the same period in 2020.

SONY’s net income attributable to the SONY Corporation’s stockholders grew by 87% or 495.2 billion yen in the 2020 Q1-Q3 period compared to the same period during the previous year. In the first three quarters of 2019, the company’s net income was 569.5 billion yen ($5.24 billion), which grew to 1,064.8 billion yen ($10 billion approx.) for the same period in fiscal 2020.