Bargaining Power of Suppliers

Sony Corporation has been the global leader in the gaming console industry, having the
capability to maintain long-term contracts with its suppliers. With such a high corporate existence
and a worldwide network of business units, the bargaining power of Sony’s supplier are relatively
low to moderate as the company can either build its own supplier or switch to another. The
suppliers which are larger in size and being scattered globally hold a little control to which greatly
reduced their bargaining power. The Sony supply chain is increasing all across the globe. The
Group has its own manufacturing facilities in Japan, China, South Korea, Thailand, Malaysia, the
United Kingdom, and Brazil as of August 2019. In fiscal 2018, the volume of geographical area
transactions with parts suppliers and OEM suppliers was as follows: China (43.2%), Japan
(22.7%), Asia-Pacific (17.7%), Europe (9.5%), the US (0.5%) and the other areas (6.4%).

Having China as the largest supplier with Foxconn, as an example, has been associated
with manufacturing for Sony, Microsoft, and Nintendo as well as other big electronics companies
such as Apple. It is easy for Sony to switch suppliers but on the contrary, for the suppliers, it can
mean a major loss. In 2012, there have been some issues of the supplier that cause Sony to go
under scrutiny for their partnership with Foxconn. It is said that the employees whose working for
the Foxconn are forced to go overtime and had some protest of their working condition. Sony then
released a statement saying that it “expects its suppliers, including Foxconn, to fully comprehend
and comply" with its supplier code of conduct.” This statements only proved, Sony has power
over their supplier.

On the other hand, gaming producers try to maintain good relationships with fewer
suppliers because they want consistency in the production of their consoles. The suppliers rely
upon the design offered by the big gaming producers like Sony, Microsoft, and Nintendo. The
suppliers then manufacture the gaming console as well as provide feedback on how to be more
efficient and cost-effective. The cost to design a console, as well as the games, can get very
expensive, these can be a factor for a demand towards the producers because this involves a
shortage of supplies and the availability of a certain input that is needed to qualify their
standards. The gaming console producer is also depending heavily on their suppliers to have the
consoles built to their specifications as well as having them done in time in order to meet the
expected demand of future customers.
Bargaining Power of Buyers

The expanding utilization of the technology providing a better way of communicating

amongst consumers has shifted the bargaining power towards the buyers. With comparison sites,
blogs and impartial review videos are easily accessible for potential buyers, Sony has to
guarantee that their products are of high quality and offers superior specifications in order to
establish that the general perception is favorable to ensure the acceptance by the consumer
markets. In such a case, the fight for every individual customer has become exceptional. Every
customer is important, and they are backed up with enough information in the digital era. They
are free to make their choices, however, there are switching costs to take into consideration when
changing from their current brand label.

Another factor that has led to an increase in the bargaining power of the buyers is the
gradual growth of players in every age group. According to data released by Statista Research
Department (2019), the results of the survey conducted to the age group of 18 years old and
above shows that 13.71% of the respondents in the Philippines stated they regularly use a Sony
consoles for gaming. And also, most buyers now preferred shopping online and use smartphones
for shopping. Every user wants to have their own way of shopping experience. So, the overall
bargaining power of the buyers gets to be somewhat substantial. There are some moderating
factors too which control the customers’ bargaining power like the brand identity, innovative
technology, level of trust according to other customers’ feedback and popularity which
moderates the bargaining power of the customers.

Conclusion