Sony PESTEL Analysis
Sony is a maker of consumer electronics, smart phones, game and network services, movies and music as well as a provider of financial services. The Tokyo based conglomerate owns a diversified business portfolio and is considered to be a leading brand in the industry. Apart from that the brand is the fifth largest manufacturer of televisions as of 2016. SONY is a market leader and one to bring several superhit products first to the market including the famous walkman. The brand has discontinued its VAIO laptop series after having run into losses in its PC division for several continuous years. However, its financial strength is not affected and the brand is doing well based on its brand image and heavy focus on innovative technology.
The brand is still a celebrity in gaming consoles, video camcorders and famous for its Experia televisions. Being a global electronics giant, the brand is faced with several types of forces in the global market. This is a PESTEL analysis of how the brand is affected by these forces which can be political, economic, social, technological or even legal and environmental. This analysis will so how SONY’s business is influenced by these forces and how it stands to gain or lose due to such pressures in the global market.
Political factors can have a major and deep impact on the business of any global brand. The political environment is not the same all over the globe and there is a deep relationship between the political environment and economic environment of a region. Political stability can also be an indicator of economic stability and if a country is politically stable, it enjoys higher growth maintains a business friendly environment. Political instability can give rise to insecurity for businesses.
Particularly, in countries like China, where a large part of SONY’s supply chain is located, any kind of political or military disruption can result in business disruption for SONY and then financial losses. Such disruptions can disrupt SONY’s or its business partner’s operations. In several regions, the chances of geopolitical conflicts, terrorist attacks or political discord are always higher. This can also have an adverse effect on SONY’s operating results and financial income. In this way, political factors can have both direct and indirect effects on SONY’s business and income.
Economic factors always have a direct and deep impact on the businesses and particularly those which are spread globally. Economic recession has not been long past. It was a period of low economic activity when millions of jobs were lost and the level of unemployment was high. The situation has changed and the condition of employment has grown a lot better since then. With rising employment, consumer confidence has returned and the level of spending has gone up. People are now more confident and spending on luxury items. With the level of disposable income having grown higher, the situation is favorable for brands like SONY.
The world economy is performing better. However, the situation is not alike everywhere and some economies are still seeing fluctuations. Russia is an example. China, India and Brazil have grown into hot markets where most of the battle is going on in the 21st century. Last year saw fluctuations in the Chinese stock market but the situation grew more stable this year. Better economic situations are always good for global businesses. Rising economic activity leads to higher sales and better profits. In this way, you can see the relationship between economic factors and the business and profitability of SONY.
Socio-cultural factors also have an important meaning in the context of international business. Changes happening at the socio-cultural level can reduce the demand for some products and services and increase it for the others. As happened in the case of social media, with its arrival several things changed. As the wave of globalization swept by, thousands of societies and cultures were brought together and several new combinations were born.
If social trends change they bring bigger changes with themselves. Socio-cultural forces affect how people choose and buy. Consumer buying decisions bear an important influence of socio-cultural factors. This also affects how brands market themselves. SONY makes a large expenditure on its marketing efforts. From market to market and region to region it has crafted different strategies which suit the local cultures and tastes.
Technological changes are happening faster in the 21st century and they are bringing bigger changes. New technologies arrive and make the old ones obsolete. SONY has made its competitive position stronger by investing in R&D and production capacity. Companies are investing in technology to strike a deeper connection with the customers and to reach a larger customer base. Whether in terms of marketing, sales or customer service, the need for investing in better technology has grown and this has affected the level of competition among the businesses. Technological factors have other kinds of effects on businesses and their competition too. In fact data and technology are playing a more important role now in the context of business.
Brands are collecting data to convert it into actionable information and using data to make real time decisions and for real time actions. Reliable data can be highly beneficial if a business wants to grow its customer base and to attract and retain customers. In terms of marketing too digital technology and social media are more effective than the traditional means. Brands that are investing in technology to provide personalized service are winning. SONY’s business is most of it about technology. From televisions to camcorders and playstations, it continues to invest in quality and technological innovation to remain ahead of competition.
Sustainability is now an important priority for big businesses in the 21st century. It is not just about reducing your carbon footprint but protecting the environment for the betterment of the community. Companies that have very low or no carbon footprint are also investing in sustainability and environment. A brand whether big or small can minimize its carbon footprint and work to protect the environment. SONY has planned for zero carbon footprint, and is now investing in further minimizing its impact n the environment.
According to SONY’s website, “Sony has continued to promote environmental activities based on our “Road to Zero” environmental plan, which aims for a zero environmental footprint. In order to accelerate our environmental activities, we have now established our “Green Management 2020” environmental targets (achievement year: FY2020). As we move toward these targets, the entire Group, including the field of entertainment in addition to electronics, will make the best use of its individual strengths in performing these activities” (Sony, sustainable development). SONY has made some appreciable progress in this direction and is now working on the next stage of its plan for a healthier and happier – a greener planet.
The role of law in the context of business is well known. There are several laws including labor related regulations, environmental regulations and taxes that the businesses are required to abide with. The situation can be especially difficult for the companies operating internationally. The legal structure differs from country to country and market to market. The international brands are required to operate and abide to all these laws in whichever country they are operating. Laws and legal hassles can also increase operational costs. In case a brand is caught in a legal tussle, it may end up coughing up millions and losing quite a major sum.
Law can become a major pain in such a case. Companies try their best to avoid legal hassles ad still problems can arise. In some countries taking necessary regulatory approvals can take months which can be a difficult situation for any business. Local legal and regulatory restrictions including labor regulations and labor union agreements can also make the situation difficult for big businesses like SONY. In this way, law and legal factors can also have a major impact on businesses and their profitability.